How to make a professional indemnity claim: step by step

Reviewed by Apex Insurance Brokers · Last reviewed 2026-08-05

Professional indemnity (PI) insurance responds when a client alleges your professional advice, design or service caused them a financial loss. But the cover only works if the claim — or the early warning sign of one — is handled correctly. PI policies are almost always written on a claims-made basis, which means the timing and manner of notification can decide whether you are covered at all. This guide walks through the process from the first hint of trouble to final resolution.

Step 1: Recognise a circumstance, not just a claim

You do not have to wait for a solicitor's letter. A PI policy asks you to notify a circumstance — any event that might reasonably be expected to give rise to a claim later. That could be a client emailing to say your report was wrong, a project overrunning because of your design, or your own team spotting an error before the client does.

Examples of a reportable circumstance include:

• A surveyor who realises a valuation may have overstated a property's worth after the lender queries it.
• An accountancy practice that discovers a filing error that could expose a client to a penalty.
• A consultancy that receives an angry email threatening "to take this further" over allegedly negligent advice.

Report these even if no money has been demanded. Failing to notify a known circumstance during the policy year in which you became aware of it is one of the most common reasons a later claim is declined.

Step 2: Do not admit liability or try to fix it yourself

Instinct says apologise and put things right. Resist it. Admitting fault, offering a refund, promising to redo work for free, or agreeing a settlement without your insurer's consent can prejudice your position and breach a condition of the policy. Most PI wordings contain a clause requiring the insurer's written agreement before you admit liability or incur costs you later want to reclaim.

You can and should stay professional and courteous with the client — acknowledge you have received their concern and are looking into it — without conceding you were at fault.

Step 3: Notify your broker or insurer in writing, promptly

Report the matter to your broker or insurer as soon as practicable. Do it in writing so there is a dated record. A good notification includes:

• What happened, and when you first became aware of it.
• The client or third party involved and the service you provided.
• Any correspondence received (client emails, letters, a formal letter of claim).
• Your own contemporaneous notes, contracts, and the engagement terms.
• An estimate of the potential financial exposure, if you can form one.

Send it to everything relevant, keep copies, and note the date. If you are unsure whether something is worth reporting, report it — a precautionary notification costs nothing and preserves your cover. Not sure your current policy covers the situation? Get a PI quote and review.

Step 4: The insurer investigates and appoints defence

Once notified, the insurer or their claims handler assesses the matter under your policy wording. For anything beyond the simplest complaint, they typically appoint specialist solicitors and, where needed, technical experts to establish whether you were actually negligent and what the loss really is.

Your job at this stage is to cooperate fully: provide documents, give a truthful account, and take no independent action on the claim. The defence is run under a duty of good faith on both sides, and the insurer generally has conduct of the claim — meaning they, not you, direct strategy and negotiation.

Step 5: Excess, defence costs and settlement

You will usually contribute your policy excess (the first slice of any settlement or, on some wordings, defence costs). Beyond that, the insurer funds the defence and any damages up to your limit of indemnity. Check whether your limit is on a "costs-in-addition" or "costs-inclusive" basis, because that affects how much cover is actually left for a settlement.

Here is how the typical stages map out:

Step 6: Resolution

Most PI claims never reach a courtroom. They resolve through negotiation, mediation, or a commercial settlement funded by the insurer, or they are defended successfully and the allegation falls away. If a claim is settled, the insurer pays damages and defence costs above your excess, up to your limit of indemnity — commonly arranged as £1m, £2m or £5m depending on your profession and any contractual or regulatory minimum.

After resolution, review what went wrong. Tightening engagement letters, scope caveats, and file records is often the most valuable outcome of a claim.

A note on run-off and retirement

Because cover is claims-made, a claim can arrive years after you finished the work. If you stop trading, retire, or let a policy lapse without run-off cover, there may be no live policy to notify. Many professional bodies require run-off for a set period after you cease practising. Keep cover in force for as long as claims could realistically emerge from past work.

Common questions

What if I disagree with how my insurer handles the claim?
The insurer usually has conduct of the claim under the policy, so their decisions on defence and settlement generally stand. If you believe the claim itself has been mishandled by the insurer as a financial services matter, you may be able to escalate through their complaints process and, if eligible, to the Financial Ombudsman Service.

Does notifying a circumstance count as a claim on my record?
Notifying does not mean you have admitted anything or that a claim will follow — many circumstances close with no payment. But insurers do ask about prior circumstances and claims at renewal, so answer those questions fully and honestly to meet your duty of fair presentation under the Insurance Act 2015. Talk to Apex about presenting your renewal.

How quickly do I need to notify?
As soon as reasonably practicable after you become aware, and always within the current policy period for circumstances you know about. Delay is one of the main reasons cover is prejudiced, so err on the side of reporting early.

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.