In UK professional indemnity insurance, the policy period is the 12-month window during which the policy is “live” and claims can be notified. The indemnity period is a separate concept describing the time over which the insurer’s obligation to indemnify the firm runs. The two are often conflated, but they answer different questions and the distinction matters when claims, run-off, or aggregation are in play.
What indemnity period and policy period mean in PI insurance
The policy period (sometimes called the period of insurance) is the dated window on the schedule — typically a year, for example 1 June 2026 to 31 May 2027. It is the period during which the contract of insurance is in force, premium is earned, and claims or circumstances must be notified to attach to that policy. On a claims-made wording, the policy period is the trigger window: a claim notified within those dates may attach, even if the underlying work was performed years earlier.
The indemnity period is the time over which the insurer remains obliged to investigate, defend and pay losses on a notified claim. Once a claim is properly notified inside the policy period, the insurer’s indemnity obligations continue until the claim is resolved — paid, settled, withdrawn or successfully defended. That process commonly takes years and routinely extends well beyond the policy expiry date.
The two concepts overlap but are not the same. The policy period sets when cover attaches; the indemnity period describes how long the insurer’s obligation runs once it has attached. For a comparable framing of when cover triggers, see claims-made vs occurrence PI.
How indemnity period and policy period work in practice
Most UK PI is written on a claims-made basis. That makes the policy period the operative trigger: the question is “was the claim or circumstance notified within these dates?” not “when did the work that caused it happen?” Provided the notification is timely and the matter is not excluded, the policy responds.
Once that trigger is met, the indemnity period takes over. The insurer:
- Investigates the matter and appoints lawyers or adjusters as needed.
- Defends or settles in accordance with the wording’s consent provisions.
- Pays indemnity within the policy limit, less any excess.
- Continues to do so until the claim is closed, even if the firm has since moved to a different insurer or ceased trading.
A few practical features follow from this:
- Closure of the policy year does not close claims attached to that year. If a circumstance is notified in the 2026 policy year, it is the 2026 insurer that handles it through to resolution in 2028, 2029 or beyond.
- The limit available is the limit on the policy at the time of notification, not at the time of payment. Increases to the limit on subsequent renewals do not retrospectively boost the 2026 year.
- Excess layers follow the same logic. A claim notified in 2026 erodes the 2026 primary limit before any 2026 excess layer responds; the 2027 programme is irrelevant.
- Run-off cover is a specialised policy that effectively extends the period during which notifications can be made after the firm ceases trading. See run-off cover — but note that even within run-off, the policy period and indemnity period distinction still applies.
Worked example
Picture a small UK accountancy practice with a £1m each-and-every limit, a £2,500 excess and a 1 June 2026 to 31 May 2027 policy period. In March 2027, the firm notifies a circumstance: a former client alleges that tax advice given in 2023 cost them £180,000. The notification is properly made in the 2026 policy year.
- The trigger is met inside the policy period (March 2027 falls between 1 June 2026 and 31 May 2027).
- The 2026 insurer accepts the notification and reserves against the 2026 £1m limit.
- The claim itself takes 26 months to resolve. Lawyers are instructed in mid-2027, expert accountancy evidence is exchanged in 2028, and the matter settles in May 2029 for £140,000 plus £35,000 of defence costs.
- All of those payments come from the 2026 policy because that is the year in which the claim was notified. The firm’s 2027, 2028 and 2029 renewals are irrelevant to this claim — they neither contribute to nor are eroded by it.
That extended payment window — March 2027 notification, May 2029 closure — is the indemnity period in action. The policy period ended on 31 May 2027, but the insurer’s obligation under the 2026 policy continued for another two years.
When this matters most
Ceasing practice or merging. When a firm closes or merges, the policy period of the last working policy becomes critical. Any claim notified after the policy expiry would not attach to that policy. Run-off cover is bought precisely to extend the notification window. The indemnity period for matters notified before closure still runs until those claims resolve.
Insurer changing. Where a firm moves from Insurer A to Insurer B at renewal, the question of which insurer handles a claim depends on when the claim or circumstance was first notified. A 2026 notification stays with Insurer A through to resolution, even after Insurer B is on cover for the 2027 year.
Aggregation of slow-developing matters. Long-running professional matters — phased construction projects, multi-year audit cycles, ongoing advice — can produce a sequence of related complaints. Whether they attach to one policy year or several depends on when each was notified, not when the underlying work was done. The aggregation clause and notification timing together control which policy period bears the loss. See aggregation of claims.
Common variations and market wording
UK PI wordings phrase these two concepts in several ways. Look for:
- “Period of insurance” — the standard market term for the policy period, dated on the schedule.
- “Period of indemnity” or “indemnity period” — used in some wordings to describe the timeframe over which the insurer remains liable to pay on a notified claim. In other wordings the term is not used at all because the principle is implicit in the claims-made structure.
- “Continuous cover” clauses — where the same insurer has been on risk over consecutive policy periods, the wording may treat late-notified circumstances under the current period rather than the historical period in which they should have been notified, subject to conditions.
- “Discovery period” or “extended reporting period” — an additional window after the policy expires during which late notifications can still be accepted. See PI extended reporting period.
- “Run-off period” — a defined number of years (commonly six for solicitors, ARB-mandated periods for architects) during which notifications can be made after a firm ceases practice.
The policy schedule and definitions section together govern. Where the wording is silent on indemnity period, the default is that the insurer’s obligation runs until the claim is resolved.
Related concepts
- Policy period — the dated 12-month window on the schedule.
- Claims-made vs occurrence — the trigger structure that makes the policy period operative.
- Run-off cover — extends the notification window after a firm ceases trading.
- Retroactive date — the earliest date of work that the policy will cover.
- Extended reporting period — a discovery window after expiry.
Frequently asked questions
Is the indemnity period the same as the policy period?
No. The policy period is the 12-month window during which the policy is live and notifications can attach. The indemnity period is the time over which the insurer’s obligation to pay runs on a notified claim, which routinely extends well beyond the policy expiry. The same insurer remains on risk for that notified claim regardless of where the firm is insured later.
If a claim is notified late, which policy responds?
A claim or circumstance must be notified within the policy period to attach to that policy. Late notification is one of the most common reasons for cover disputes. Some wordings provide a discovery or extended reporting period; otherwise, the firm risks the matter falling between policy years with neither insurer accepting it. See notification deadline.
What if I change insurer between notification and settlement?
The insurer on risk at the time of notification handles the matter through to resolution. Subsequent changes of insurer do not transfer the claim. The new insurer is not on risk for matters already notified to the previous insurer.
Does the indemnity period have an end date?
The indemnity period does not have a hard end date in most wordings. It runs until the claim is resolved by judgment, settlement, withdrawal, or other final closure. Practical limits come from the policy limit of indemnity — once exhausted, the insurer’s payment obligation stops — and from any time-bar defences available to the underlying claim.
How does run-off cover interact with these concepts?
Run-off cover provides a policy period after a firm ceases trading, during which late-arising claims can still be notified. The policy period is then defined for the run-off years; the indemnity period still runs from notification until claim resolution as in a working policy. Run-off is usually purchased for several years to capture the latent claims tail.
Why does this distinction matter at renewal?
At renewal, the new policy is a fresh policy with its own period and limit. Claims notified in the old year stay with the old policy. Firms moving insurers should ensure all known circumstances are properly notified to the outgoing insurer before the renewal date, not just left for the incoming insurer to pick up.
Are the same definitions used across the UK market?
Most UK PI wordings broadly align, but the specific words differ — some use “indemnity period”, some refer only to the insurer’s continuing obligation under general terms. The key is the practical effect: when does cover attach, and how long does the insurer remain on risk for that attached matter. Read the definitions and conditions section of the schedule rather than relying on summary documents.
Does the limit of indemnity reduce over the indemnity period?
The limit available to a claim is the limit at the time of notification. As payments and reserves accumulate, the available limit reduces for that year. The limit does not “top up” because time passes — it is fixed at the year’s limit and erodes as the claim is paid out. On an aggregate policy, other claims notified in the same year compete for the same pool.
{
"@context": "https://schema.org",
"@type": "Article",
"headline": "PI indemnity period vs policy period: how they differ and why it matters",
"description": "The policy period is the 12-month window in which claims can be notified; the indemnity period is the time the insurer's obligation runs. Practical UK guide.",
"author": {
"@type": "Organization",
"name": "Apex Insurance Brokers Ltd",
"url": "https://www.apexinsurancebrokers.co.uk/"
},
"publisher": {
"@type": "Organization",
"name": "Apex Insurance Brokers Ltd"
},
"datePublished": "2026-05-29",
"dateModified": "2026-05-29",
"inLanguage": "en-GB"
}
{
"@context": "https://schema.org",
"@type": "DefinedTerm",
"name": "Indemnity period vs policy period (PI insurance)",
"description": "The policy period is the dated 12-month window during which a PI policy is in force and claims can be notified. The indemnity period is the time over which the insurer's obligation to investigate, defend and pay a notified claim runs, which routinely extends beyond the policy expiry.",
"inDefinedTermSet": {
"@type": "DefinedTermSet",
"name": "Apex Insurance Brokers Glossary",
"url": "https://www.apexinsurancebrokers.co.uk/glossary/"
}
}
{
"@context": "https://schema.org",
"@type": "FAQPage",
"mainEntity": [
{
"@type": "Question",
"name": "Is the indemnity period the same as the policy period?",
"acceptedAnswer": {
"@type": "Answer",
"text": "No. The policy period is the 12-month window during which the policy is in force and claims can be notified. The indemnity period is the time the insurer remains liable to investigate and pay a notified claim, which usually extends beyond the policy expiry."
}
},
{
"@type": "Question",
"name": "If a claim is notified late, which policy responds?",
"acceptedAnswer": {
"@type": "Answer",
"text": "A claim must be notified within the policy period to attach to that policy. Late notification is a common reason for cover disputes. Some wordings include a discovery or extended reporting period; otherwise the matter risks falling between years with neither insurer accepting it."
}
},
{
"@type": "Question",
"name": "What if I change insurer between notification and settlement?",
"acceptedAnswer": {
"@type": "Answer",
"text": "The insurer on risk at the time of notification handles the matter through to resolution. Changing insurer at later renewals does not transfer the claim. The new insurer is not on risk for matters already notified."
}
},
{
"@type": "Question",
"name": "Does the indemnity period have an end date?",
"acceptedAnswer": {
"@type": "Answer",
"text": "The indemnity period runs until the claim is finally resolved by judgment, settlement, withdrawal or closure. The practical limit is the policy limit of indemnity, which can be exhausted by payments and reserves."
}
},
{
"@type": "Question",
"name": "How does run-off cover interact with these concepts?",
"acceptedAnswer": {
"@type": "Answer",
"text": "Run-off cover provides policy periods for several years after a firm ceases trading, during which late notifications can be accepted. The indemnity period still runs from notification to claim resolution as in a working policy."
}
},
{
"@type": "Question",
"name": "Why does this distinction matter at renewal?",
"acceptedAnswer": {
"@type": "Answer",
"text": "Claims notified in the old policy year stay with that policy. Firms changing insurer should ensure all known circumstances are properly notified to the outgoing insurer before renewal, not deferred to the incoming insurer."
}
},
{
"@type": "Question",
"name": "Does the limit of indemnity reduce over the indemnity period?",
"acceptedAnswer": {
"@type": "Answer",
"text": "The available limit is the limit at the time of notification and erodes as payments and reserves accumulate. It does not top up because time passes. On an aggregate policy, other claims notified that year share the same pool."
}
},
{
"@type": "Question",
"name": "Are the same definitions used across the UK market?",
"acceptedAnswer": {
"@type": "Answer",
"text": "Most UK PI wordings align on the substance but use different words. Some define indemnity period explicitly; others rely on the claims-made structure. The schedule and definitions section govern in each case."
}
}
]
}
About Apex Insurance Brokers Ltd
Apex Insurance Brokers Ltd is a Bristol-based insurance broker authorised and regulated by the Financial Conduct Authority (firm reference number 724952). The company is registered in England and Wales under Companies House number 07014570. Contact: info@apexinsurancebrokers.co.uk | 0117 325 0027.
Last reviewed: May 2026 by Apex Insurance Brokers Ltd.
Important: this article is general information, not advice on your specific circumstances. For advice on PI insurance for your firm, contact us on 0117 325 0027 or info@apexinsurancebrokers.co.uk.