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Commercial insurance · Contract requirements · Checked 7 September 2026
When a client, contract or tender tells you to hold insurance, it usually names a type of cover, an amount and how long to keep it. Here is what those asks mean, the detail that most often trips firms up, and how to satisfy them quickly.
Part of: Commercial insurance at Apex
In short
A contract requirement almost always sets four things: the type of cover (commonly employers’ liability, public liability, professional indemnity or cyber), a limit of indemnity, the basis of that limit (each claim or in the aggregate), and how long to keep the cover in force. Only employers’ liability is compulsory by law — at least £5 million from an authorised insurer; the rest are contractual, so the buyer sets the numbers. The detail that catches firms out is ‘each and every claim’ versus ‘in the aggregate’, and asks to be named on someone else’s policy. A broker can test the market, put compliant cover in place and issue a certificate quickly.
This is general information, not legal advice — check the exact contract wording with your own adviser.
Insurance clauses in commercial contracts, professional appointments and tenders are more alike than they look. They almost always specify four things: the type of cover, a limit of indemnity (an amount), the basis of that limit — each and every claim, or in the aggregate — and a period for which the cover must be kept in force, often for years after the work is finished. The amount is usually a figure the parties fill in, not something hard-wired into the standard form: the public-sector Selection Questionnaire and standard construction contracts such as the JCT leave the limit as a placeholder for the buyer to set (PPN 03/23 Selection Questionnaire; C-Link, JCT insurance guide).
So the first job is to read the clause and separate what the law fixes from what the client has chosen. Almost everything a contract asks for is buyer-set and negotiable; the one hard legal floor is employers’ liability at £5 million, covered below.
| Cover | Legal status | Why a contract asks for it |
|---|---|---|
| Employers’ liability | Compulsory — at least £5m, authorised insurer | Required by law once you employ staff, and commonly confirmed in contracts and tenders (gov.uk) |
| Public liability | Not compulsory | Very commonly required by contracts and trade bodies; the amount is set by the buyer (Howden) |
| Professional indemnity | Not generally compulsory (some regulators mandate it) | Required where you give advice, design or provide a professional service |
| Product liability | Not compulsory | Required by manufacturers, suppliers and retailers; covers harm from defective goods (Simply Business) |
| Cyber | Not compulsory | Increasingly required in data, technology and service contracts |
Each has its own page in this cluster. Pick the one your contract names, or read on for the traps that apply across all of them.
The single most common misunderstanding is the basis of a professional indemnity or liability limit. ‘Each and every claim’ (sometimes written ‘any one claim’) means the full limit is available to each separate claim in the policy year. ‘In the aggregate’ means the limit is the total for all claims that year combined, so several claims erode one shared pot (Kingsbridge).
That difference can put a firm in breach without it realising. A practice holding £1m in the aggregate does not satisfy a contract that asks for £1m each and every claim, because the bases are not the same: on an aggregate policy, three £300,000 claims in one year would leave only £100,000 for anything else, whereas each-and-every-claim cover would meet each of them in full (Kingsbridge). When a clause states a basis, match it exactly; where it is silent, ask before you rely on your existing limit.
Contracts often ask you to add the other party to your cover, or to prove your cover exists. These asks are not equal, and it is worth knowing which you have been given:
See adding a client as additional insured and certificate of insurance requests for the detail. Which one your contract truly needs is a wording question for your legal adviser.
Many appointments say cover must be kept in force for a number of years after the work is complete, commonly six or twelve. This is because professional indemnity is claims-made: the policy that responds is the one in force when the claim is made, not when the work was done, so cover has to stay live for as long as a claim could still arrive (Designing Buildings).
The periods track the law of limitation. Under the Limitation Act 1980, a claim for breach of a simple contract can generally be brought for six years from the breach, rising to twelve years where the contract is executed as a deed — measured from the act, not from when the problem is discovered (Pinsent Masons). A ‘maintain cover’ clause is therefore a continuing obligation: if you stop trading or change insurer, you may need run-off cover to stay protected for past work (Designing Buildings).
Public bodies buy through a standard process. The Selection Questionnaire issued under Procurement Policy Note 03/23 asks suppliers to confirm they hold, or can commit to obtain, set levels of employers’ liability, public liability, professional indemnity and product liability — each shown as a £x placeholder for the buyer to complete. Its guidance notes the £5 million statutory floor for employers’ liability and tells buyers to set the other levels case by case, ‘proportionate and reflective of the nature of the work and the risk involved’ (PPN 03/23 Selection Questionnaire).
Framework levels vary widely. When the Crown Commercial Service drew up G-Cloud 14 it initially proposed £10m professional indemnity, £10m public liability and £5m employers’ liability across all lots, then, after supplier objections, reverted for the main lots to £1m professional indemnity and £1m public liability while keeping £5m employers’ liability; the largest lot stayed at £25m (as reported by Computer Weekly, 7 March 2024). Treat those as an illustration of how far figures can move, not a fixed rule. The NHS Standard Contract, similarly, requires providers to maintain appropriate indemnity arrangements and to produce evidence on request, without fixing monetary limits in the standard text (NHS Standard Contract 2024/25). Our insurance requirements for UK tenders page goes into more detail.
Most requirements are straightforward to meet once you know what is being asked. A practical order of work:
If a contract has set you a deadline, the fastest route to compliant cover and a certificate is an independent broker who can test the market, place the cover on the right basis and issue the certificate your client needs.
Apex Insurance Brokers is an independent insurance broker established in 2009 and based in Bristol, owned entirely by its directors and directly authorised by the FCA since 2016, placing professional indemnity insurance for professional and commercial firms across the UK. It is one of the longest-established independently owned professional indemnity specialists in the UK, and it is not for sale: we have declined approaches to buy the firm. We are not tied to any single insurer or professional-body scheme, we do not run our own policy or underwriting, and we have no placement quotas. We have access to over 30 markets, including Lloyd’s syndicates via wholesale, and we usually return three or four competing quotes set out so you can compare them like for like. Every client has a named broker — the same person from first quote to renewal — and every claim notification gets director-level attention rather than a call-centre queue.
Only two covers are compulsory in the UK: employers’ liability insurance, once you employ anyone who is not a close family member, and motor insurance. Public liability, professional indemnity, product liability and cyber are not required by law. So when a client or contract ‘requires’ one of those, it is a contractual demand set by the buyer, not a legal minimum you have breached.
It means the full limit of indemnity is available to each separate claim in the policy year. That is different from ‘in the aggregate’, where one limit is shared across all claims in the year. A firm with £1m in the aggregate does not meet a £1m each-and-every-claim clause, so match the basis the contract states, not just the amount.
No. A certificate is evidence that cover is in place; it does not amend the policy or give the holder any rights under it. Being made a joint or named insured is a stronger, separate request that gives the other party its own rights and needs the insurer’s agreement. A contract may ask for one, the other, or both, so read which it wants.
Because professional indemnity is claims-made: the policy that pays is the one in force when a claim is made, not when you did the work, and claims can surface years later. The six or twelve-year periods track the Limitation Act 1980 for simple contracts and deeds. It is a continuing obligation, so if you stop trading you may need run-off cover to stay protected.
No. Public liability is not compulsory, so there is no statutory figure; the buyer chooses the amount, and £1m, £2m, £5m and £10m are all commonly seen. The only cover with a legal floor is employers’ liability, at £5 million. Match the public liability figure the contract sets, and confirm the basis if one is stated.
Standard liability cover can often be arranged quickly once a broker has your details, and a certificate follows once the policy is in place. Professional indemnity usually needs a short fact-find first, because the insurer prices your work, fee income and claims history. If a deadline is tight, tell the broker the date the client has set.
A contract can ask, and there is a range of asks. ‘Noting the interest’ of the client is usually a simple endorsement your broker arranges. Making the client a joint or named insured, or adding a waiver of subrogation, is a real change that needs the insurer’s agreement. A broker tells you which your contract needs and whether the insurer will grant it.
The Standard Selection Questionnaire lists four covers — employers’ liability, public liability, professional indemnity and product liability — with the amounts left for the buyer to complete. Only employers’ liability carries the £5 million statutory floor; the others are set case by case and proportionate to the work. You can confirm cover you hold, or commit to obtain it, before the contract starts.
Send us the clause or the certificate request. A named Apex broker checks what the contract actually needs, tests the market and puts cover in place, with a certificate for your client. Or call 0117 325 0027.
Get a quote Start a commercial quoteApex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information, not legal advice, and it does not guarantee that cover will be available or on what terms. Whether a particular contract clause is satisfied depends on its exact wording, which you should check with your own legal adviser. Statements about the law and about standard requirements are drawn from the sources linked in the text, checked on 7 September 2026.
