PI insurance for new planning consultancies

Why cover should start before your first contract

Most new planning consultancies are started by people who already have work lined up: a former employer subcontracting overflow, an authority contact who wants continuity, a developer who followed them out of the practice. The instinct is to get the work moving and sort insurance once the first invoice is paid. That order is backwards.

The advice you give in week one carries exactly the same liability as advice given in year ten. An opinion on the planning prospects of a site, sent by email before any formal appointment exists, is still advice a client can rely on and later claim over. If no policy was in force when the claim eventually arrives, and no policy covers the period the advice was given, you are personally exposed.

There is a practical reason too. Almost any client with a procurement function, and every local authority, will ask for evidence of PI insurance before they can instruct you. Having the policy in place turns that from a delay into a formality. Cover for a startup consultancy can usually be arranged quickly, so there is little to gain from waiting.

The retroactive date: the most important date you have never heard of

PI policies work on a claims-made basis: the policy that pays is the one in force when the claim is made, not when the work was done. To stop people buying insurance only after a problem emerges, policies carry a retroactive date. Work done before that date is not covered, however good the policy is otherwise.

For a new practice, the retroactive date is normally set at the start of your first policy. Every year you renew without a gap, that date stays put, and the covered history behind you grows. This is why continuous cover matters so much: let the policy lapse and a new insurer may reset the retroactive date, cutting off cover for everything you did before.

It is also why buying cover before the first instruction matters. Advise informally in March, buy a policy in June, and that March advice sits before the retroactive date, permanently uninsured. Planning advice has a long tail, with problems often surfacing when a scheme stalls years later, so a clean retroactive date from day one is worth protecting carefully.

What your first clients will ask for

Expect requests for a certificate or broker's letter confirming your PI cover, the limit and the basis on which it is written. Local planning authorities, housebuilders and framework operators all have standard insurance schedules, and some will specify an each-and-every-claim basis or a minimum period for which cover must be maintained after the work completes.

Read those insurance clauses before you sign rather than after. If an appointment demands a higher limit than you carry, that is a conversation to have with your broker and possibly the client before signature. Agreeing to carry cover you do not have is a breach of contract from day one, and it is a surprisingly common one among new consultancies.

Keep everything: policy schedules, appointment insurance clauses, certificates you issue. When a client asks in year three what cover you carried in year one, or an insurer asks about your claims history, a tidy file answers in minutes what a shoebox answers in weeks.

Common first-year mistakes

The first mistake is the gap: starting work before cover starts, or letting the policy lapse in a quiet spell to save money. Both can leave permanent holes in your covered history that no future policy will fill. If cash flow is the concern, talk to your broker about how payment is structured rather than switching cover off.

The second is buying purely on price without checking what the policy actually covers. Planning consultancy sits in a miscellaneous category with some insurers, and wordings vary. Check that the description of your business activities matches what you really do, including any appeals work, expert evidence or neighbourly matters, because work outside the stated activities may not be covered at all.

The third is underestimating obligations that outlive the project. Appointments often require insurance to be maintained for years after completion, and closing or merging the practice triggers the need for run-off cover. None of this needs solving on day one, but knowing it exists stops you signing obligations you have not priced in. And if you take on your first employee, remember employers' liability insurance becomes a legal requirement, with a statutory minimum of £5m.

Getting set up without overbuying

A new consultancy does not need the insurance programme of a fifty-person practice. It needs a PI policy with a sensible limit driven by its first contracts, public liability if you attend sites and meetings, employers' liability once anyone works for you, and cyber cover is worth a conversation once client files and portal access build up. Everything else can wait until the work justifies it.

The limit question for a startup is really a contracts question. Look at the insurance clauses in the appointments you expect to sign in the first year and let the highest requirement set your floor, with the value of decisions relying on your advice pushing it up from there. As instructions grow, review the limit rather than assuming year one's answer is permanent.

Finally, be accurate on your proposal form. Describe your intended work honestly, including the split between application work, appeals and strategic advice. The proposal is the basis of the contract with your insurer, and accuracy at the start is what makes the policy dependable when you need it.

Frequently asked questions

When exactly should a new planning consultancy buy PI insurance?

Before giving any advice a client might rely on, which in practice means before your first instruction, formal or informal. Cover arranged from day one fixes your retroactive date at the start of your practice, so your whole professional history stays insured as long as cover continues.

What is a retroactive date and why does it matter?

It is the date before which work is not covered by a claims-made PI policy. For a new practice it is usually set when cover first starts. Maintain continuous cover and it stays put; let cover lapse and a new insurer may reset it, permanently excluding your earlier work.

Can I pause my PI cover between projects to save money?

It is a false economy. Claims arrive when they arrive, not when you are busy, and a claim made during a gap in cover is not insured even if the work was done while a policy was in force. Gaps can also reset your retroactive date, which affects everything you have done before.

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This page is general information, not advice on a specific policy.