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A professional firm’s insurance programme is not a PI policy with extras bolted on; it is a stack of distinct covers, each of which responds to a different category of loss, and most of which are required by law or regulator.
PI sits at the centre and gets the attention. But for a typical twenty-person professional services firm — solicitors, accountants, surveyors, architects, consultants — the protection that actually carries the business across a bad year often comes from one of the policies sitting around it. Public liability, employers’ liability, directors and officers, cyber, crime, and office contents each have a defined job to do. This guide explains how they fit together, what is compulsory, what is optional but commercially essential, and what an integrated programme should look like for a mid-sized professional firm.
Picture the firm. Twenty fee-earners and support staff, a Tier 1 city centre office of 4,000 sq ft, fee income of £6m, a board of three executive directors and two non-executive directors, around £8m of work-in-progress on the balance sheet, and a £400,000 IT investment in the last three years including a cloud-hosted practice management system. The firm is incorporated as an LLP.
That profile generates exposure across at least seven distinct insurance categories:
Some firms add legal expenses, key person, and management liability extensions. A few add specie cover for items held on the premises (probate-held valuables, original engineering models). The structure varies but the categories above are the spine.
Each policy responds to a defined category of loss. The mistake is to assume overlap; in practice the policies are designed not to overlap, and where they appear to, the wordings contain “other insurance” clauses that allocate the loss to the most specific cover.
PI responds to civil liability arising from the provision of professional services. It is the firm’s largest single insurance spend in almost every case and the cover the regulator requires. It does not respond to bodily injury, premises damage, employee claims, or director duty breaches.
PL responds to third-party bodily injury or property damage caused by the firm in the course of its activities. A visitor tripping in reception, a file room flood damaging the office next door, a marketing event injuring a guest — these are PL claims. PL does not respond to professional negligence, employee injury, or director claims.
EL is compulsory under the Employers’ Liability (Compulsory Insurance) Act 1969 for any business with one or more employees. The statute requires a minimum £5m per claim and a current certificate of insurance to be displayed (electronic display is permitted). The HSE enforces. EL responds to employee bodily injury, disease, or death arising out of and in the course of employment, including industrial disease claims with very long tails.
D&O responds to claims against directors personally arising from their conduct as directors. Under Companies Act 2006, sections 170 to 177, directors owe statutory duties to the company including the duty to promote the success of the company (s.172) and the duty to exercise reasonable care, skill and diligence (s.174). Breach exposes the director personally to claims from the company, shareholders, regulators, or insolvency practitioners. D&O typically also covers entity securities claims and provides defence costs cover for regulatory investigations.
Cyber responds to a category of loss that the other policies actively exclude. PI excludes most pure cyber losses where there is no professional services failure; PL excludes most data-related claims; crime excludes cyber business interruption. A standalone cyber policy responds to ransomware, breach response costs, third-party data liability, regulatory defence, and business interruption from a cyber event.
Crime / fidelity responds to direct financial loss from theft, fraud, and (where the wording is written for it) social engineering payment fraud — for example, where staff are duped into wiring funds to a fraudulent account by way of authorised push payment. Wordings vary materially on social engineering.
Office contents and BI responds to physical damage to the firm’s contents and the revenue loss from inability to trade following an insured peril (fire, flood, escape of water, malicious damage).
Insurance Act 2015 applies across all commercial covers. The duty of fair presentation under section 3 is wide; section 11 protects insureds where breach of a term is unrelated to the actual loss.
Take a twenty-person consultancy practice, fee income £6m, incorporated as a limited company. Over an eighteen-month period the firm experiences:
No single policy could have covered the full picture. The point is not that the firm needs more cover — it is that the cover needs to be coordinated, and renewals managed, so that no loss falls in the gap between two policies.
Apex’s view: Most firms are over-insured on the things that rarely happen and under-insured on the things that happen routinely. The programme that comes through our door for review almost always has too much office contents cover, an EL limit nobody has touched since 2015, and a cyber sub-limit that will not cover a single ransomware incident. The fix is unglamorous: a programme review every two years, with a written summary, signed off by the board. We do this for clients and it almost always changes the spend allocation rather than the spend total.
Apex Insurance Brokers serves UK professional services firms and commercial businesses. Call 0117 325 0027, email info@apexinsurancebrokers.co.uk, or request a quotation.
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