How much is professional indemnity insurance for contractors?
Reviewed by Matthew Bartlett, Director, Apex Insurance Brokers Limited · Last reviewed 2026-08-05
If you have searched for a single figure, you have probably found the honest answer is "it depends" — and that is genuinely true for professional indemnity (PI) insurance. Unlike a fixed product, a PI premium is calculated from your individual circumstances. Rather than quote a misleading average, it is far more useful to understand the drivers that move the number up or down, because those are the things you can actually influence and discuss with a broker.
What professional indemnity insurance covers
PI insurance responds when a client alleges that your professional work — advice, design, a service or a specification — was negligent, and that they suffered a financial loss as a result. It typically covers your legal defence costs and any damages or settlement you become liable to pay. For contractors, it is often a contractual requirement written into agreements before you can start on site or begin a project.
Because it is tied to the professional obligations you take on, the cost reflects how much financial exposure an insurer believes those obligations carry.
The main drivers that move your premium
Underwriters weigh a handful of factors together. No single one sets the price; they interact.
| Driver | Why it moves the price |
|---|---|
| Turnover / fee income | Higher income usually means larger contracts and bigger potential losses, so premiums generally rise with turnover. |
| Type of work / activities | Design responsibility, structural work or safety-critical tasks carry more risk than lower-exposure services. |
| Cover limit chosen | A higher indemnity limit (e.g. £5m rather than £1m) increases the insurer's maximum exposure and the premium. |
| Claims history | Previous claims or known circumstances suggest higher future risk and typically raise the price. |
| Sector risk | Some sectors are viewed as more litigious or higher-value, which feeds into the rating. |
| Excess and retroactive date | A higher voluntary excess can reduce premium; the period of past work covered also affects it. |
Turnover and fee income: usually the starting point
For most contractors, projected annual turnover (or fee income) is where underwriting begins. It is treated as a proxy for the scale of the contracts you take on and, therefore, the size of a loss a client could suffer. A sole trader turning over a modest amount will sit in a very different bracket from an established contracting firm with substantial revenue. Keeping your declared figures accurate and up to date matters — under-declaring can jeopardise a claim, and over-declaring simply costs you more.
The work you actually do
Insurers look closely at your activities. A contractor who only supplies labour under a client's design carries different exposure from one who takes on design-and-build responsibility, where a fault in the design itself can lead to a claim. Safety-critical, structural or specialist work generally attracts higher rating than lower-risk services. Describing your work precisely helps a broker place you correctly rather than defaulting to a cautious, more expensive assumption.
Want a figure based on your actual work, not a guess? Tell us your turnover and activities and we will source the market for you.
Get a PI quote →Choosing your cover limit
The indemnity limit is the maximum the insurer will pay, and it is one of the biggest levers on price. Common generic options are:
- £1m — often the entry-level option for smaller contracts.
- £2m — a frequent middle choice where clients ask for more headroom.
- £5m — typical where larger clients, public bodies or main contractors set higher contractual minimums.
Do not pick a limit purely to save money. Many contracts specify a minimum limit, and being underinsured can breach the contract and leave you exposed above the limit. It is also worth checking whether cover is offered on an "each claim" or "aggregate" basis, as this affects how much protection you really have over a year. A broker can match the limit to your contractual obligations rather than a round number.
Claims history and how you present your risk
A clean claims record works in your favour. Where there have been past claims or circumstances that could give rise to one, you must disclose them — and they will usually be reflected in the price. Presentation matters too: a clear account of your risk management, contracts and quality controls gives underwriters confidence and can help you secure better terms than a thin, generic submission.
How a broker helps you get the right price
Because PI is individually rated, the same risk can be priced quite differently across insurers. A broker adds value by:
- Presenting your business accurately so you are rated fairly, not conservatively.
- Approaching insurers whose appetite suits your trade and turnover.
- Comparing not just price but wording, limit basis, exclusions and excess.
- Making sure the cover meets your contractual requirements.
The goal is not the cheapest number on screen but the right cover at a fair premium. You can start a quote with Apex and we will do the market legwork for you.
Common questions
Can you tell me a rough price over the phone?
We can give an informed indication once we know your turnover, activities and the limit you need — but a firm figure always comes from underwriting your specific details. A quick quote is usually the fastest way to a reliable number.
Does a higher limit always cost a lot more?
Not always proportionally. Moving from £1m to £2m or £5m increases the premium, but the step-up depends on your risk profile. A broker can price the options side by side so you can weigh cost against your contractual needs.
Will one claim make my insurance unaffordable?
A claim can increase your premium and you must disclose it, but it rarely makes cover impossible. How the claim arose and what you have changed since both matter, and a broker can present that context to insurers.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This guide is general information, not advice on a specific policy or a substitute for your policy wording.