Professional Indemnity Insurance FAQ: Your Questions Answered

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

This FAQ answers the questions we are asked most often about professional indemnity insurance. Each answer is written to stand on its own, so you can jump to the point that matters to you. If you would rather talk it through, you can start a quote in a few minutes.

What does professional indemnity insurance actually cover?

PI insurance responds when a client alleges they have lost money because of your professional work. Typical triggers include:

• Professional negligence — a mistake, error or omission in your advice or service.
• Breach of professional duty or breach of contract relating to the service provided.
• Loss of documents or data entrusted to you.
• Unintentional breach of confidentiality or infringement of intellectual property.
• Defamation arising from your professional activities.

The policy generally pays your legal defence costs as well as any damages or settlement you become liable for, up to your chosen limit. Exactly what is covered depends on your policy wording, so the schedule and terms always take precedence over any summary.

Who needs professional indemnity insurance?

If your business provides advice, a professional service, designs or specialist knowledge for a fee, PI insurance is usually relevant. Common examples include consultants, accountants and bookkeepers, solicitors, architects and engineers, surveyors, IT and software developers, marketing and PR agencies, recruitment firms, and management or HR consultants.

For many regulated professions PI cover is not optional. Bodies such as the Solicitors Regulation Authority, the Royal Institution of Chartered Surveyors (RICS), the Institute of Chartered Accountants in England and Wales (ICAEW) and the Architects Registration Board set minimum PI requirements as a condition of membership or registration. Even where it is not mandatory, many clients now insist on it before awarding a contract.

Is professional indemnity insurance a legal requirement?

There is no single UK law that forces every business to hold PI cover. However, it becomes effectively compulsory in two situations: when your professional body or regulator requires it, and when a client contract stipulates it. Firms authorised by the Financial Conduct Authority, for example, must hold PI cover meeting the FCA’s minimum requirements. Always check your own regulator’s rules and your client contracts, because the required limit is often set higher than a business would choose on its own.

How much cover do I need?

The right limit of indemnity depends on the size of the contracts you handle, the potential loss a client could suffer, and any minimum set by a regulator or customer. As a starting point, businesses often consider these illustrative options:

These are generic illustrations, not a recommendation. Check whether your limit needs to apply to each claim or in the aggregate across the policy year, and whether defence costs sit inside or on top of the limit — both make a real difference to how far your cover stretches.

What is a “claims-made” policy and why does it matter?

Almost all PI policies are written on a claims-made basis. This means the policy that responds is the one in force when the claim is made against you — not the one that was in force when you did the work. Two practical consequences follow:

• You must keep cover in place continuously, even for past work, because a claim can surface years later.
• You need to tell your insurer about any circumstance that might lead to a claim as soon as you become aware of it, so it falls within the current policy period.

This is why a gap in cover, or stopping cover when you retire or sell up, can leave you exposed to claims about work you completed long ago.

What is run-off cover?

Run-off cover is PI insurance that continues to protect you after your business stops trading, merges, or you retire. Because policies are claims-made, a client could bring a claim about your past work after you have closed. Run-off cover keeps a policy in place to respond to those late claims. Many professional bodies specify a minimum run-off period, so check your regulator’s rules if you are winding down.

What affects the cost of PI insurance?

Premiums are individually rated, so we never quote a price without understanding your business. The main factors insurers weigh up include:

• Your profession and the type of advice or service you provide.
• Annual fee income or turnover.
• The limit of indemnity and excess you choose.
• Your claims history and how long you have traded.
• The nature of your clients and contracts — for example, larger or higher-risk projects.

Because of this, two firms in the same sector can pay very different premiums. Presenting your business well at renewal — clear risk information, a clean claims record, sensible contracts — is one of the most effective ways to keep cover competitive. That is where a broker adds value.

How is PI different from public liability insurance?

The two are often confused but cover very different risks. In simple terms:

• Professional indemnity covers financial loss a client suffers because of your advice, service or design.
• Public liability covers physical injury to a person or damage to property caused by your business activities.

Many professional firms need both. If a client trips in your office, that is public liability; if your report contains an error that costs them money, that is professional indemnity.

What should I do if a claim is made?

Notify your insurer or broker straight away — do not wait until the position is clearer. Under a claims-made policy, prompt notification is often a condition of cover. Avoid admitting liability or agreeing a settlement before your insurer is involved, keep all relevant documents and correspondence, and let the insurer’s appointed specialists guide the response. Early, honest disclosure gives you the best chance of a good outcome. You can also review your cover with us before renewal.

Common questions

Does PI cover fines or penalties?
Generally no. PI insurance is designed to cover compensation to clients and associated legal costs, not regulatory fines, criminal penalties or the return of fees you were not entitled to. Check your wording for the precise position.

Can I get PI cover for past work I’ve already completed?
Often yes, through “retroactive” cover. A policy can be set to cover work carried out before the start date, provided you were not already aware of a potential claim. Tell your broker the earliest date you need covered.

I’m a sole trader — do I still need it?
Yes, if you give advice or provide a professional service for a fee. A single mistake can generate a claim far larger than your business, and many clients will not engage a sole trader without PI cover in place.

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.