A restitution claim is a demand to return money or value that has been unjustly received — for example, a fee that has to be repaid because the work was never performed properly or because the recipient was not legally entitled to retain it. UK professional indemnity policies usually exclude pure restitution from cover, but treat restitution-shaped amounts as covered where they form part of compensatory damages. The line between the two is where most disputes lie.
What a restitution claim means in PI insurance
In English law, restitution is the body of remedies that requires a person to give back something they have received without legal entitlement. The clearest example in a professional context is fee disgorgement — the requirement to repay fees received for work that was substandard, in breach of fiduciary duty, or otherwise unjustly retained. Other restitutionary remedies include accounting for profits, repayment of mistaken payments, and the return of money obtained by breach of trust.
Restitution is conceptually different from damages. Damages compensate the claimant for loss suffered (the claimant is restored to the position they would have been in had the wrong not occurred). Restitution requires the defendant to give up an enrichment (the defendant is stripped of an unjust gain). In many real-world claims, the two overlap or run side by side, but the legal labels carry different consequences for insurance.
UK PI policies are designed to indemnify the firm against compensatory damages and defence costs arising from claims for civil liability following a negligent act, error or omission. Restitution sits awkwardly with that purpose. A firm being made to disgorge fees has not — at least not in the pure restitution sense — been ordered to pay compensation for loss; it has been ordered to return money it never deserved. From an insurance principle perspective, paying a firm’s restitution liability is close to paying the firm to keep money it should never have had.
For these reasons, restitution claims are usually treated narrowly in UK PI cover.
How PI policies treat restitution
Three patterns appear across UK PI wordings.
Pure restitution generally excluded. Most UK PI wordings either expressly exclude restitution and disgorgement, or do so by definition — for example, by restricting cover to “compensatory damages” and excluding amounts the insured was never legally entitled to retain. Where a claim is purely a demand to repay fees because they were unearned, cover is typically not available.
Restitution as part of damages may be covered. Where a single sum is both restitutionary in form and compensatory in substance — for example, where a court orders the firm to repay an amount that exactly equals the loss caused to the claimant — cover may follow the substance. Some UK wordings now expressly cover amounts that the insured is required to pay as part of an award of damages, regardless of whether the labels used by the court are damages, restitution, or account of profits. Other wordings remain narrower. The wording controls.
Specific overlaps with other exclusions. Restitution claims commonly trigger or interact with other exclusions:
- Dishonesty exclusion. Disgorgement is frequently sought where a dishonest or fraudulent act has occurred. Where the dishonesty exclusion applies, cover is excluded regardless of the restitutionary form. The dishonesty extension carve-back in some wordings preserves cover for innocent partners; see dishonesty extension.
- Fines and penalties exclusion. Regulatory orders to disgorge profits — for example, an FCA financial penalty calculated by reference to profits earned — straddle the line between restitution and penalty. The fines and penalties exclusion usually closes off cover for the penalty element regardless. See fines and penalties exclusion.
- Trading losses or rectification costs. Restitution claims sometimes look like rectification of the insured’s own work, which has its own treatment in PI wordings.
The policy wording’s definition of “loss”, “damages” and “claim”, and the wording of any specific exclusion for disgorgement or unjust enrichment, together govern. There is no market-standard answer that applies across all UK PI policies.
Worked example
A 15-partner UK financial advisory firm receives a complaint from a corporate client. The firm had been paid £180,000 over three years for ongoing advice that the client now says was never actually delivered — the advice consisted only of generic templates and there is no evidence of bespoke work. The client also says it suffered consequential loss of £350,000 because it made decisions on the basis of believing the firm was actively monitoring its position.
The client’s claim breaks down into two components:
- £180,000 restitution / fee disgorgement — repayment of fees the firm received without delivering the contracted service.
- £350,000 compensatory damages — loss caused by relying on the firm’s purported ongoing advice.
Under a typical UK PI wording with a restitution exclusion, the position is likely to be:
- The £180,000 disgorgement element is excluded. The firm is required to find this from its own resources. The insurer will normally pay any defence costs incurred in resisting the disgorgement claim (subject to the rest of the wording), but not the disgorgement amount itself.
- The £350,000 compensatory element is in principle covered, subject to the limit, excess, and any other applicable exclusions. The insurer indemnifies the firm against this part of the claim and pays defence costs.
If the firm’s wording is broader and treats restitution-shaped amounts as covered where they form part of an award of damages, the £180,000 may be partially or wholly covered. Conversely, if the claim involved a dishonesty finding against a partner, the dishonesty exclusion would close off cover for that partner’s actions entirely (subject to the innocent-partner carve-back).
The numbers are illustrative; the point is that PI wordings unbundle a single client complaint into compensable and non-compensable elements, and the firm needs to know in advance which is which.
When restitution claim cover matters most
Three situations bring the restitution question to the fore.
Regulated financial services and advisory work. Where the FCA, FOS or another regulator orders redress to clients, the redress is sometimes restitutionary in form — return of fees, repayment of premiums, or refund of charges. Whether this is covered under PI turns on whether the wording treats redress as damages, restitution, fines, or a hybrid. See FOS jurisdiction.
Solicitors and accountants on fee disputes. Where a client alleges the firm did not deliver what was paid for and demands the fee back, the claim is restitutionary in form. PI wordings vary in whether they cover the firm’s defence of such claims and whether they cover any disgorgement ordered. Some wordings draw the line at “amounts the insured was never entitled to retain” — others are broader.
Construction and surveying overpayment claims. Where a surveyor or quantity surveyor’s certified payment turns out to have been excessive, the claim against the surveyor may be restitutionary as well as in negligence. The classification of the claim affects which parts of the recovery are covered.
Common variations and market wording
UK PI wordings express the treatment of restitution in several different ways:
- “This policy does not cover amounts the insured is required to pay by way of restitution, disgorgement or account of profits.” Express, narrow restitution exclusion.
- “Loss does not include the return of fees, commissions or other consideration paid to the insured.” Definition-led exclusion of fee disgorgement.
- “Loss includes damages, judgments and settlements the insured is legally obligated to pay, but excludes restitution, unjust enrichment or the return of fees.” Combined positive and negative definition.
- “Cover extends to amounts the insured is required to pay as part of an award of damages, regardless of whether characterised as restitution, account of profits, or otherwise.” Broader wording covering restitutionary amounts that form part of a damages award.
- “Civil liability extension.” A broad-form civil liability wording captures restitutionary claims in some circumstances but is rarely written without express carve-outs for disgorgement. See civil liability extension.
- “Regulatory redress sub-limit.” Some wordings provide a separate sub-limit for redress payments ordered by FOS or FCA, with its own conditions and exclusions.
The wording must be read in context. A single phrase can shift the practical position by tens or hundreds of thousands of pounds in a real claim.
Related concepts
- Fines and penalties exclusion — closely related; regulatory restitutionary orders often interact.
- Dishonesty extension — where dishonest conduct is alleged, restitution often follows.
- Quantum of PI claim — how a claim’s value is calculated and which elements are insured.
- Economic loss claim — the more common form of PI claim, sitting on the compensatory side of the line.
- Civil liability extension — how a broad wording approaches non-classical claim shapes.
Frequently asked questions
Is restitution covered by UK PI insurance?
Pure restitution — for example, an order to repay fees that the firm was never entitled to retain — is typically not covered. Restitution-shaped amounts that form part of a compensatory damages award may be covered, depending on the wording. The wording’s definition of “loss” and any express restitution exclusion together determine the answer.
Why is restitution treated differently from damages?
Damages compensate the claimant for loss. Restitution strips the defendant of an unjust gain. Insurance principles indemnify against compensable loss to a third party rather than against the firm being required to return something it should never have had. Most UK wordings reflect this distinction.
Are defence costs covered when defending a restitution claim?
Usually yes, even where the underlying restitution liability is excluded. UK PI wordings commonly cover defence costs for any claim within the broad scope of the policy, including claims where the eventual liability falls within an exclusion. The schedule sets out whether defence costs are inside or outside the limit. See defence costs inside vs outside the limit.
What is fee disgorgement?
A specific type of restitution requiring the firm to return fees it has received. Disgorgement may follow a finding that the work was not performed as agreed, that the firm acted in breach of fiduciary duty, or that the fees were obtained through misconduct. UK PI wordings typically exclude fee disgorgement.
Does the dishonesty exclusion affect restitution claims?
Often yes. Disgorgement is frequently sought where dishonesty is alleged. Where the dishonesty exclusion applies, cover is excluded regardless of whether the claim is in restitution or damages form. The dishonesty extension in some wordings carves cover back in for innocent partners not implicated in the dishonest conduct.
What about FCA or FOS-ordered redress?
Redress ordered by the FCA or FOS sometimes has a restitutionary character — return of fees, premiums or charges. Whether it is covered depends on the wording. Some PI policies include an express sub-limit or extension for regulatory redress; others treat such redress as restitution and exclude it. The wording must be checked in each case.
Is an order to “account for profits” covered?
This is a restitutionary remedy stripping the defendant of profits earned. UK PI wordings typically exclude account-of-profits remedies in the same way they exclude disgorgement. Some broader wordings may cover account-of-profits where ordered as part of a damages award.
Can I buy specific restitution cover?
Specific extensions covering restitution are rare in standard UK PI markets. Some specialist or large-firm wordings include broader definitions of loss that capture restitutionary amounts in defined circumstances. Brokers can sometimes negotiate a clarification or sub-limit. There is no general market-wide restitution add-on for PI.
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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.