This FAQ hub answers the questions UK firms most often ask about Professional Indemnity (PI) Insurance — what it covers, how much it costs, how claims work, what your regulator requires, and what to think about at renewal. The answers are written for principals, partners, directors and finance leads who need a working understanding rather than a sales pitch, and they reflect the position under UK law and FCA rules as at May 2026.
PI is a contract-driven product. The wording you hold matters more than any general rule of thumb, and individual circumstances change the answer to many of the questions below. Where regulator rules are cited — SRA, ICAEW, ACCA, ARB, RICS, BCS, HMRC, FCA — the source is named so you can verify the position. For sector-specific detail, follow the links to our solicitors, accountants, architects, surveyors and IT professionals FAQ pages. For tailored guidance on your own arrangements, contact Apex Insurance Brokers on 0117 325 0027 or info@apexinsurancebrokers.co.uk.
What PI insurance is
What is Professional Indemnity Insurance?
Professional Indemnity Insurance — PI or PII — is a liability policy that responds when a client or third party alleges they have suffered financial loss because of professional services your firm provided. The policy pays your legal defence costs and any damages or settlement awarded against you, up to the policy limit and subject to the excess. It is the principal financial backstop for advisory and design-led businesses where a mistake, omission or piece of negligent advice can cost a client real money. PI sits alongside other covers (public liability, employers' liability, cyber, D&O) and does a job none of those policies do.
Who needs PI insurance in the UK?
Any firm that advises, designs, certifies or otherwise provides professional services where a client could suffer financial loss from a mistake. For many regulated professions — solicitors, licensed accountants, architects, RICS surveyors, IFAs, insurance brokers, healthcare professionals — PI is mandatory under regulator rules. For unregulated professions such as IT consultancy, management consultancy, marketing agencies, recruiters, training providers and engineers, PI is rarely a legal requirement but is frequently demanded under client contracts, public-sector tenders and framework agreements. If your work product could be relied on, you should consider PI.
Is PI insurance the same as public liability insurance?
No. Public liability covers personal injury and damage to third-party property arising from your business activities — the visitor who slips, the laptop you knock off a client's desk. PI covers financial loss caused by your professional advice or services — the wrong tax return, the missed deadline, the negligent design. The two are complementary but distinct, and the wording matters: an injury claim arising out of a design defect can sit in the grey area between PI and PL, which is one reason brokers pay attention to how the two policies interact rather than buying them in isolation.
Is PI the same as Errors and Omissions (E&O) insurance?
For practical purposes in the UK, yes. "Errors and Omissions" is the term used in the United States and in some international wordings; "Professional Indemnity" is the term used in the UK and Commonwealth markets. The cover scope is materially the same: liability for financial loss caused by negligent acts, errors or omissions in the provision of professional services. If you contract with a US parent or US clients and they ask for "E&O", a UK PI policy will normally satisfy the requirement — but check whether the certificate of insurance needs to use the US term to keep procurement teams comfortable.
Is PI insurance a legal requirement?
It depends on your profession. For solicitors regulated by the SRA, licensed accountants under ICAEW/ACCA/AAT/CIOT, architects on the ARB Register, RICS surveyors, FCA-regulated financial advisers, registered insurance brokers, healthcare professionals and certain other regulated activities, PI is mandatory and the regulator sets minimum terms. For unregulated professionals there is no general statutory requirement, but PI is frequently a contractual requirement of clients or a condition of tender. Operating without it where it is mandatory is a regulatory breach; operating without it where a contract requires it is a breach of contract.
What is the difference between "claims-made" and "occurrence" PI?
Almost all UK PI policies are written on a "claims-made" basis: the policy that responds is the one in force when a claim is first made against you, regardless of when the work was done. An "occurrence" policy responds based on when the act giving rise to the claim happened. Claims-made is dominant in PI because professional negligence claims often surface years after the underlying work. The practical implication: you must keep PI in place continuously, and you must buy run-off cover when you stop trading, because there is no later policy to pick up a claim made after cancellation.
Why is PI written on a claims-made basis?
Because professional negligence claims have long tails. A tax return signed off in 2020 might generate a discovery assessment in 2026 and a negligence claim in 2027. An architect's design dating from 2018 might give rise to a Building Safety Act claim in 2030. Underwriters can only price the current year's exposure if they know what claims sit on the policy — they cannot price unknown claims that might be reported years later. Claims-made cover lets the insurer underwrite annually based on present circumstances, but it puts the onus on the insured to maintain unbroken cover or buy run-off.
What is the "insuring clause" in a PI policy?
The insuring clause is the headline promise of the policy — the sentence or paragraph that says what the insurer will pay for. A typical PI insuring clause says the insurer will indemnify the insured against civil liability for any claim first made against the insured during the policy period arising from the conduct of the professional business. Everything else in the wording — exclusions, conditions, definitions, endorsements — narrows or modifies that promise. When comparing policies, read the insuring clause first, then the definition of "claim", "professional business" and "civil liability", and only then the exclusions.
Cover and limits
How much PI cover do I need?
Start with two numbers: the largest single financial exposure a client could suffer from a mistake on your work, and your regulator's minimum (if any). The right limit normally exceeds the higher of those two, with headroom for defence costs. Defence costs alone can run to six figures on a contested claim. Most small professional firms buy between £250,000 and £2m; mid-sized practices typically buy £2m to £10m; firms with large or high-risk engagements buy higher. A broker will benchmark you against peer firms and the kind of contracts you sign.
What does "any one claim" mean versus "aggregate"?
"Any one claim" means the policy will pay up to the stated limit for each separate claim made during the policy year — so a £1m any-one-claim policy could in principle pay £1m on one claim and another £1m on a second. "Aggregate" or "in the aggregate" means the limit is the total the insurer will pay across all claims in the year — once exhausted, that's the lot. Many PI policies combine the two: an any-one-claim limit with an aggregate cap. Read both numbers and understand which applies.
Are defence costs paid inside the limit or in addition?
Both structures exist. "Costs inclusive" or "costs in limits" policies erode your indemnity limit as defence costs are incurred — a £1m policy with £400,000 of defence costs leaves £600,000 for any settlement. "Costs in addition" policies pay defence costs over and above the indemnity limit, sometimes capped at a multiple of the limit. Costs-in-addition cover is generally preferable but is not always available, particularly for higher-risk professions or smaller firms. The basis on which costs are paid should be checked at every renewal.
What is a policy excess and how does it work?
The excess (sometimes called a deductible) is the amount the insured pays towards each claim before the insurer's indemnity kicks in. It usually applies to both damages and defence costs, though some policies apply the excess only to settlements. Excesses range from £500 for very small firms to six figures for large practices. A higher excess reduces premium but transfers risk; choosing a level you can genuinely fund from cash flow without disrupting the business is more important than chasing the maximum premium saving.
What is typically excluded from a PI policy?
Standard exclusions include: dishonesty, fraud or criminal acts by the insured; bodily injury and property damage (handled by PL/EL); pollution; cyber events (often covered under a separate cyber policy); insolvency of the insured; fines and penalties; trading losses and lost profits of the insured itself; matters known about before inception; and disputes about the insured's own fees. Some policies also exclude US/Canadian jurisdiction, certain high-risk activities, and work for related parties. Exclusions vary materially between insurers — never assume your new wording matches your previous one.
Does PI cover regulatory fines?
Generally no. Fines imposed by a regulator (SRA, FCA, ICO, ARB, RICS, HSE) are excluded as a matter of insurance law in most jurisdictions, on public-policy grounds — the deterrent effect would be diluted if a regulated firm could insure the penalty. What can sometimes be covered is the legal cost of defending the regulatory investigation that gives rise to the fine; some PI policies include "regulatory defence costs" as a sub-limit, and standalone regulatory cover is available for higher-risk professions.
Does PI cover criminal acts by employees?
Civil claims arising from an employee's negligent act will normally be covered; deliberate criminal or dishonest acts will not. However, many PI policies will respond to a claim brought by a client where the firm itself is sued for the consequences of an employee's dishonesty — that is, the insurer steps in to defend the firm against the client claim — even though the policy excludes cover for the dishonest individual. Separate Fidelity Guarantee or Crime cover is usually needed to recover the firm's own losses caused by employee dishonesty (a stolen cheque, for example).
Does PI cover loss of documents?
Most PI policies include some cover for the cost of replacing or restoring documents lost or damaged in the course of your work — usually subject to a sub-limit. "Documents" is now generally defined to include electronic records as well as paper files. The cover is for the reasonable cost of reconstruction, not the value of the data itself, and it does not usually respond to data breach costs (which fall under cyber). It is useful but rarely the headline feature of the policy.
What does "civil liability" wording mean?
A "civil liability" PI wording is the broadest form of insuring clause: the policy responds to any civil liability arising from the conduct of the professional business, rather than to specifically listed types of negligent act. The alternative is a "breach of duty" or "negligent act, error or omission" wording, which only responds to the listed triggers. Civil-liability wordings catch claims based on breach of contract, breach of statutory duty, breach of fiduciary duty and other heads of action that a narrower wording might not pick up. Most reputable UK PI markets now offer civil-liability cover as standard.
Is dishonesty by a partner or director ever covered?
The dishonest individual is never covered. Whether the firm is covered for the consequences of one partner's or director's dishonesty depends on the wording. Better wordings include an "innocent partner" or "innocent insured" provision that preserves cover for partners or directors who did not participate in, condone or know about the dishonest act. Smaller firms in particular should check this clause — without it, one rogue partner can collapse the whole firm's cover, leaving innocent partners exposed personally.
Does PI cover sub-contractors and consultants?
Usually yes, but only for liability you incur for their work — not for their own separate liability. If you sub-contract an element of a project and the sub-contractor is negligent, your client will normally sue you (the head consultant) and your PI policy will respond. You may then seek to recover from the sub-contractor's own PI insurer. Most wordings require that sub-contractors carry their own appropriate PI cover; some require evidence of it. Failing to vet sub-contractor cover can leave you absorbing a loss you would otherwise have recovered.
Does PI cover work done overseas?
It depends on the policy's "geographical limits" and "jurisdiction" clauses. Geographical limits define where the work can be done; jurisdiction defines where claims can be brought against you. Many UK PI policies cover worldwide work but exclude claims brought in US/Canadian courts because of the very different damages regime there. If you are advising clients with US operations or working on overseas projects, the wording needs to be reviewed specifically — assumptions are often wrong.
What is "civil liability" versus "breach of duty" wording, in practice?
Imagine a software consultant whose missed deliverable causes a client to lose a procurement contract worth £400,000. Under a broad "civil liability" wording, the claim is for breach of contract and is covered. Under a narrower "breach of duty" wording that only responds to negligent acts, errors or omissions, the insurer may argue that pure breach of contract — without negligence — is not within the insuring clause. The point is the same head of loss, but the trigger language can decide whether the policy responds.
What is "joint insured" or "additional insured" status?
A joint insured is a separate legal entity (often a group company or LLP member) named alongside the lead insured on the policy schedule, with full rights under the policy. An additional insured is usually a client or contracting party added to the policy for a specific project, typically for the limited purpose of preventing the insurer from suing them in subrogation. The two are very different. Adding additional insureds carelessly can extend cover in ways the insurer did not price for — broker advice is essential before agreeing in a contract.
Cost and premium
How much does PI insurance cost in the UK?
There is no single answer — premiums depend on profession, fee income, claims history, limit, excess, work mix and the insurer's appetite. As a rough benchmark, a small unregulated consultancy might pay between £400 and £1,200 a year for £250,000 to £1m of cover. A small accountancy or architectural practice typically pays between £1,200 and £4,000. A small law firm pays from around £3,000 to £6,000 for SRA-compliant cover. Higher fees, higher limits and adverse claims history push premiums up sharply. The most reliable answer for your firm comes from a quote.
What factors affect a PI premium most?
Fee income (the main proxy for exposure), profession, claims history in the last five to six years, indemnity limit, excess, work mix (high-risk activities such as tax planning, audit, expert witness or design-and-build push premium up), geographical spread of clients, contract terms you sign up to (especially uncapped liability), and the insurer's view of your underwriting controls — file management, supervision, regulatory standing. A claim-free firm with conservative work, a moderate limit and good controls is meaningfully cheaper to insure than a peer with the opposite profile.
Why has my PI premium gone up despite no claims?
Premium movements often reflect the wider market rather than your individual record. Insurers reprice when reinsurance costs rise, when claims experience across the profession deteriorates, when a regulator changes the minimum terms, or when an insurer withdraws capacity from a sector. The UK PI market has cycled through several hard markets in the past decade. Even an excellent claims record cannot fully offset a market-wide repricing, though it usually moderates the impact. A broker should explain what is firm-specific and what is market-driven in any quoted increase.
Can I pay PI premium monthly?
Most insurers offer premium finance — typically a third-party credit agreement that lets you spread the premium over ten or eleven monthly instalments, with interest. The headline interest rate varies but is often higher than your business overdraft. Some smaller PI markets do not offer monthly payment for very small premiums or new-start firms. If cash flow is tight, premium finance is usually available; if cash flow allows, paying annually is cheaper. The annual-versus-monthly cost comparison should be in any quote your broker presents.
Is PI insurance tax-deductible?
PI premium paid wholly and exclusively for the purposes of the trade is normally an allowable expense for income tax (sole traders, partnerships) and corporation tax (companies and LLPs) — it is a business expense like any other insurance. There is no input VAT to recover because insurance premiums are exempt from VAT, though Insurance Premium Tax at 12% (the standard rate at May 2026) is applied to most general insurance premiums and is included in the gross premium you pay. Your accountant can confirm the position for your structure.
Does a higher excess reduce my premium?
Yes, usually meaningfully. Insurers price excess movements by a percentage uplift or discount relative to a standard level. Doubling the excess might cut premium by 10–20%; quadrupling it might cut 20–35%. The trade-off is that you absorb more of every claim — and the excess usually applies to defence costs as well as damages, so even a successfully defended claim costs you the excess. A sensible excess is one your firm can fund without difficulty from a single bad month; chasing the maximum premium saving is rarely worth the risk.
Does claims history affect renewal premium?
Almost always. Insurers ask for five to six years of claims and circumstances at proposal and renewal, and they price the answer. A clean record is the largest single premium driver after fee income. A single notified claim or circumstance — even one that closed without payment — will typically attract questions, and may attract a loading or a restricted renewal. Multiple incidents, particularly in the same area of work, can mean a much harder renewal conversation or, occasionally, a move to a specialist market. Honest, full disclosure is the only safe approach.
Are there cheaper PI options for new firms?
New-start firms often face higher per-pound-of-fee-income premiums than established peers because insurers have no track record to price against. Some markets specialise in start-ups and price more competitively if the principals can demonstrate good experience and credentials. Group schemes through professional bodies are worth checking. The trade-off with the cheapest scheme is sometimes wording — narrower cover at a lower price can leave gaps that only show up at the first claim. A broker can compare wordings as well as price.
Will buying through a broker cost more than buying direct?
Not usually. UK PI insurance is overwhelmingly distributed through brokers, and most specialist PI insurers do not deal directly with the public. The broker is remunerated either by commission (paid by the insurer out of the premium, not added to it) or by a fee. Where commission is paid, the premium you would pay direct (if it were available) is normally not lower than the broker-quoted premium for the same risk. A broker also adds market access, wording review and claims advocacy that direct-purchase routes do not provide.
Claims and notification
What counts as a "claim" under a PI policy?
A claim is typically defined as a written demand for money or services, a civil proceeding (court claim, arbitration), or any other formal allegation of liability. Most wordings now also treat a written threat of a claim as a claim. The definition matters because the policy's notification duties trigger on a claim being made — what counts as a claim therefore determines what you must report and when. Verbal complaints are usually outside the strict definition of "claim" but may be a "circumstance" you should still notify.
What is a "circumstance" and why does it matter?
A circumstance is any fact or matter the insured becomes aware of that may give rise to a claim — for example, a missed deadline you've spotted, an email from a client raising concern, or a regulator's letter. Most PI policies require you to notify circumstances during the policy year if they could reasonably be expected to lead to a claim. Doing so brings any future claim arising from that circumstance back to the current policy, even if the actual claim is made years later — which protects you against changes in insurer, limit or wording.
When must I notify a claim or circumstance?
Most PI policies require notification "as soon as practicable" or "as soon as reasonably possible" after the insured becomes aware of the claim or circumstance, and in any event before the end of the policy period. Failure to notify in time can prejudice cover — in serious cases the insurer can decline the claim. Treat notification as a same-week task once you know there is a real issue: tell your broker, give the underlying facts, and let the broker handle the formal notification letter to insurers. Speed is far cheaper than delay.
What happens if I notify late?
The legal position under the Insurance Act 2015 is that an insurer can only avoid the policy for late notification if the breach is sufficiently serious — but it can reduce the claim payment proportionately if late notification has caused it to suffer prejudice (for example, lost the chance to settle early, or to control defence). In practice, late notification is one of the most common reasons cover is restricted on a PI claim. The honest answer to "what happens if I notify late" is "it depends, but rarely in your favour".
Should I notify a complaint that hasn't become a claim?
Often yes. If a client complaint contains an allegation that your firm has caused them financial loss — even if no money has been demanded — it is usually a "circumstance" you should notify. A complaint about service quality with no loss alleged is normally not a circumstance. The judgement call is whether the complaint, on its face, could reasonably develop into a claim. When in doubt, tell your broker — the broker can take a view and, if appropriate, lodge a precautionary notification.
Does notifying a claim raise my premium?
Notifying a circumstance that doesn't develop into a claim usually has limited direct premium impact, particularly if it closes within a year or two. A notified claim that results in a payment will affect future renewals — both yours and (in some cases) your wider sector pricing. The premium consequence of a claim is rarely a reason to delay notification. Late notification can move a recoverable claim out of cover altogether, which is a far worse outcome than a renewal loading.
What is the claims process step-by-step?
You become aware of a claim or circumstance; you tell your broker the facts in writing; the broker prepares and submits a notification to the insurer with supporting documents; the insurer acknowledges and appoints solicitors to investigate; you and the insurer's solicitors review the underlying file; the solicitors advise on liability and quantum; the insurer takes a coverage position; the matter is defended, settled or fought to judgment, with the insurer funding the defence and paying any settlement within the limit (less your excess). Brokers manage the choreography end-to-end.
Can I choose my own solicitor in a PI claim?
Usually not by default. Most PI policies entitle the insurer to appoint solicitors of its choice from its approved panel, both to control defence costs and to deploy specialist defence counsel. Some wordings permit the insured to nominate a solicitor with the insurer's consent; some allow the insured to use its own solicitor at its own cost for a portion of the work. If having a specific solicitor matters to you, raise it before inception — not when the claim arrives.
Will the insurer settle without my consent?
PI policies typically include a "consent to settle" clause that requires the insurer to obtain the insured's consent before settling a claim. Most wordings include a "hammer clause" — if you refuse to consent to a settlement the insurer recommends and the matter then settles or is decided for more, you are responsible for the additional cost. The clause exists to balance the insured's reputational interest in defending against the insurer's commercial interest in cost-effective settlement. Take broker advice before refusing consent.
What happens if a claim exceeds my policy limit?
The insurer pays up to the limit; the insured pays the excess and any sum above the limit. For larger firms this is the single biggest reason to buy meaningful headroom over the regulator's minimum. For partnerships, sums above the limit are recoverable from partners' personal assets unless the firm is an LLP or limited company; even then, partners and directors can have personal exposure on certain heads of claim. The limit-versus-cost analysis should be revisited every renewal as fee income and engagements grow.
Does my PI cover defence of regulatory investigations?
Most policies include a regulatory defence costs extension — usually as a small sub-limit (£25,000 to £250,000 is typical) — which pays legal costs of representing the insured at a regulator's investigation. The cover is for defence, not for fines or compensation orders. For firms in heavily regulated sectors (solicitors, financial advisers, healthcare) the regulatory defence sub-limit is often insufficient and a standalone regulatory cover is sensible. Check the sub-limit at renewal; it can be increased for a modest additional premium.
Are settlement payments to clients taxable?
For the paying firm: a settlement paid out of insurance proceeds is not deductible to the extent it has been recovered from insurance. For the receiving client: tax treatment depends on what the settlement compensates for — restoration of capital is usually not taxable, replacement of taxable income is. The position can be complex and depends on the specific facts; clients on the receiving end usually take their own tax advice. The settling firm should document the components of the settlement to assist both sides' tax positions.
Renewal, cancellation and switching
When should I start my PI renewal?
Begin the renewal process at least six to eight weeks before expiry. PI markets need time to review proposal information, ask follow-up questions, and obtain underwriter sign-off on quotes. For larger or more complex firms — particularly law firms, audit practices and architects with high-rise residential exposure — start ten to twelve weeks out. Last-minute renewals risk a forced extension on terms you would not have chosen, or a cover gap if the existing policy lapses before terms are agreed. A broker will normally start chasing renewal information six to eight weeks out as standard.
What information will insurers ask for at renewal?
Expect a proposal form covering: corporate structure and principals; fee income split by service line and (sometimes) by sector; claims and circumstances in the last five to six years (often six for solicitors); details of large engagements; risk management procedures; details of any uncapped liability accepted in contracts; details of overseas work; and confirmations on regulatory standing. Solicitors and accountants face additional regulator-specific questions. Honest, complete answers are essential — material non-disclosure can lead to cover being avoided.
Can I switch PI insurer mid-policy?
Almost never in practice. PI policies are typically twelve-month contracts that cannot be cancelled mid-term except for non-payment or insolvency. Even if cancellation were possible, the claims-made structure means cancelling mid-year leaves a gap that no later policy will fill. The realistic time to switch insurer is at renewal. Some structural changes — a merger, a sale, a major restructuring — give rise to "change in risk" provisions that allow mid-term repricing or, in extreme cases, cancellation, but these are exceptions rather than a route out of a policy you don't like.
What happens if I switch insurer at renewal?
The new insurer's policy responds to claims first made during its policy period. The old insurer's policy responds to claims first made during its policy period, including claims arising from events that happened during its period but were notified to it in time. To prevent a gap, the new policy should be on a "fully retroactive" basis with no retroactive date (or with a retroactive date matching the start of your previous unbroken PI cover). Without that, claims arising from older work may fall between the two policies.
What is a "retroactive date"?
The retroactive date in a PI policy is the date before which the policy will not respond — work done before the retroactive date is excluded. A fully retroactive policy has no retroactive date and covers work back to the start of your professional services, subject to claims-made notification. A policy with a retroactive date — typically the date the policy first incepted — leaves you uncovered for work done before that date if the original policy that covered it has lapsed. Always check the retroactive date when switching.
Will switching insurer trigger questions about past claims?
Yes, in full. A new insurer will ask the same five-to-six-year claims history that your incumbent asks at renewal. It will also normally ask whether you are aware of any matters that could give rise to a claim — which includes circumstances notified to your previous insurer. The expectation is full disclosure: a switch should not be used to "park" notified circumstances with the previous insurer. Doing so risks the new insurer declining cover when the eventual claim arrives.
What is the "notification of circumstances" before renewal?
Most insureds with active concerns about a piece of work make a formal notification of circumstances to the current insurer before renewing or switching. This crystallises which policy responds to any future claim arising from that work. Without notification, a later claim may fall on the new policy — which may have a different limit, excess, exclusions, or even insurer. Pre-renewal circumstance reviews are standard practice in better-managed firms and should be a deliberate item on the renewal timeline.
What is "block" or "scheme" PI insurance?
A block or scheme policy is a PI arrangement negotiated by a professional body, a broker or an affinity group for a defined population of similar firms — for example, members of a small accountancy network or franchisees in a particular sector. The advantage is generally simpler administration and (sometimes) competitive pricing. The trade-off is that the wording is one-size-fits-all and may not be the best fit for every member. A scheme is worth comparing; it is not automatically the best answer.
What happens to my PI cover if I sell my firm?
The sale of a firm is a "change in control" that usually triggers a notification obligation under the existing policy. The acquiring firm's PI policy will normally need to be amended to add the acquired entity; the selling principals will normally need run-off cover for any claims arising from their work pre-sale that surface after the policy expires. The contractual terms of the sale should allocate responsibility for run-off premium; this is one of the most frequently overlooked points in practice sales and is worth raising with both broker and solicitor early.
What is the difference between policy expiry and policy cancellation?
Expiry is the natural end of the twelve-month policy term; cancellation is termination of the policy during the term. PI policies are usually written non-cancellable mid-term except for non-payment of premium, insolvency of insurer, or (in some wordings) material change in risk. Expiry without renewal leaves you uncovered for claims first made after that date, which is why run-off is essential when stopping trading. Cancellation may also affect cover for claims made during the cancelled period, depending on the wording.
Run-off and retroactive cover
What is run-off cover?
Run-off cover is PI insurance bought after you stop trading or after a particular activity ceases, to respond to claims first made after that point arising from work you did while still operating. Because PI is claims-made, the policy in force when the claim is made is the one that responds — and without run-off there is no such policy. Run-off is a separate, usually decreasing-rate annual policy bought for a defined number of years following cessation. For most regulated professions, the run-off period is set by the regulator.
How long does run-off cover need to last?
It depends on profession and limitation periods. Solicitors regulated by the SRA must hold "extended policy period" cover and post-six-year run-off via the SRA's run-off provisions. Accountants regulated by ACCA must hold six years of run-off; ICAEW similarly requires run-off cover for two years post-closure under its participating-insurer regime. Architects on the ARB Register are required to maintain run-off "for an appropriate period" — typically six to twelve years given the Limitation Act and Defective Premises Act. RICS-regulated surveyors must maintain run-off for six years. For unregulated firms, six years is a sensible default to match the basic contract limitation period.
How much does run-off cost?
Typically expressed as a percentage of the last live premium. A common pattern is 100% in year one of run-off, decreasing in later years — for example 100%, 75%, 60%, 50%, 40%, 35% across six years. Some insurers offer a single "block" run-off premium covering the entire required period. Run-off premium is highest in the year immediately after cessation (when the most claims emerge) and tapers as the limitation periods elapse. The cumulative cost over six years often runs to three to four times the last live premium.
Can I buy run-off from an insurer I'm not currently with?
Generally no. Run-off is normally bought from the insurer on cover at the date trading ceases, because that insurer has the underlying file and the claims tail. Some specialist markets offer "stand-alone" run-off for firms whose previous insurer has exited the market — at higher premium and usually narrower terms. The practical message is: at the point of cessation, your incumbent insurer holds most of the leverage. Planning ahead and engaging the broker early can preserve options.
What happens if I retire and don't buy run-off?
Any claim made against you after the policy expires has no insurer to respond. The claimant will pursue you personally — for partnerships, every partner remains jointly and severally liable; for LLPs, the LLP itself may have been dissolved but former members can still be sued for negligent acts; for limited companies, the company may have been struck off, but directors can have residual personal exposure. Practitioners who retire without run-off cover often find a claim ten years later that they have to pay personally.
Is run-off needed if I sell to another firm?
It depends on what is sold and how the contract is drafted. If the buyer's PI policy is endorsed to cover the historic acts of the seller, separate run-off may not be needed. If the buyer's policy only covers acts post-completion, the seller must buy run-off for the pre-completion tail. The buyer-seller PI position is one of the items often glossed over in practice sales and should be specifically negotiated. The selling principals' personal exposure is the issue at stake.
What is "extended reporting period" or "discovery period"?
A discovery period or extended reporting period (ERP) is a sub-form of run-off: a defined window after expiry during which the insured can notify claims arising from work done during the policy period. Some PI policies include an automatic 30, 60 or 90-day ERP at no extra cost; longer ERPs (typically twelve months upwards) can be purchased. ERPs are not a substitute for proper run-off, but they can fill a short gap — for example, between cessation of trading and the start of formal run-off cover.
Can I cancel run-off cover early?
Practically no. Once entered, run-off cover runs to the end of the agreed period; cancelling early leaves the same exposure run-off was bought to address. Some insurers technically allow cancellation but will not return premium; others build the multi-year run-off premium into a single up-front payment that is non-returnable. The decision to enter run-off should be taken on the assumption that it will run to its full term — the only sensible position given the long tail of professional negligence claims.
What is "retroactive cover" and how is it different from run-off?
Retroactive cover is the part of a live PI policy that picks up claims arising from work done before the policy began — defined by reference to the policy's retroactive date. Run-off cover is PI insurance bought after trading has ceased to pick up claims arising from past work. Both deal with historical work, but retroactive cover sits inside a live policy and protects an active firm; run-off is a stand-alone arrangement for a firm that has stopped. Understanding the difference matters at every renewal and at every firm-level change.
Regulatory and contract requirements
What does the SRA require for solicitors' PI?
The SRA Minimum Terms and Conditions (MTC) require all SRA-regulated firms to hold PI from a Participating Insurer on the MTC wording. Minimum limit is £2m for any one claim (£3m for LLPs and companies). The cover must be on a civil-liability basis, must include defence costs in addition to the limit, and cannot be avoided for non-disclosure (except in cases of fraudulent non-disclosure). Run-off through the SRA's framework lasts six years post-closure. The MTC is one of the broadest mandated PI wordings anywhere in the world.
What does the FCA require for insurance brokers' PI?
FCA-authorised general insurance brokers and intermediaries fall under MIPRU rules. MIPRU 3.2 sets the minimum PI requirements: limit of €1.3m (approximately £1.1m) per claim and €1.9m in aggregate, with proportionate scaling based on commission income. The cover must respond to claims under FCA Handbook rules and must include legal defence costs. Conduct rules also require the broker to act in clients' best interests, which includes recommending appropriate PI for the client where the broker also broker their PI cover.
What does ICAEW require for accountants' PI?
Under the ICAEW PII Regulations as revised in 2024, member firms must hold qualifying insurance with a Participating Insurer. Minimum limit is £2m any one claim and in the aggregate for firms with gross fee income above £800,000; for smaller firms the minimum is 2.5 times gross fee income subject to a £250,000 floor. Maximum aggregate excess is the higher of £3,000 or 3% of gross fee income. Run-off cover is required for two years post-closure. Firms above £50m in fee income are not required to hold qualifying insurance but must demonstrate appropriate arrangements.
What does the ARB require for architects' PI?
The ARB Code requires all registered architects to hold PI insurance "appropriate to their work" — there is no fixed monetary minimum in the Code itself. ARB's general guidance points to a minimum of £250,000 for sole practitioners doing small residential work, scaling significantly upward for higher-risk work. Buildings within scope of the Building Safety Act 2022 — higher-risk buildings, generally residential 18m+ — carry significantly higher PI expectations; insurers may decline to cover or require sub-limits for cladding and fire safety work. Run-off must be maintained for an appropriate period after cessation.
What does RICS require for surveyors' PI?
The RICS Professional Indemnity Insurance Requirements set minimum cover scaled by turnover: £250,000 for firms with turnover up to £100,000; £500,000 for £100,000 to £200,000; £1m for above £200,000. Cover must be on RICS-approved wording with an RICS Approved Insurer for firms with turnover above £100,000. Run-off cover must be maintained for a minimum of six years following cessation. Additional requirements apply to firms doing valuation work, particularly residential mortgage valuations. RICS publishes the Approved Insurer list and minimum wording on its website.
Do public sector contracts require specific PI levels?
Frequently yes. UK central and local government framework agreements often specify minimum PI cover — typically £1m, £2m or £5m depending on the work — and may require the cover to be unlimited in number of claims, to include a specific retroactive date, or to name the contracting authority as additional insured. Crown Commercial Service frameworks, NHS Shared Business Services contracts, and most local authority frameworks include explicit PI clauses. Read the contract requirement carefully before submitting — a tender promising £2m cover when you hold £1m is a misrepresentation.
What is "qualifying insurance"?
"Qualifying insurance" is a regulatory term used by ICAEW, the SRA and some other bodies to describe a PI policy that meets the regulator's prescribed minimum wording and is provided by an insurer that has signed up to the regulator's framework (a "Participating Insurer"). Qualifying insurance gives the insured the comfort that the policy meets the regulatory floor. Buying from a non-participating insurer — even at a lower premium — does not satisfy the regulatory requirement and may put your practising authorisation at risk.
How do I evidence PI to a client?
The standard evidence is a Certificate of Insurance issued by the insurer or broker, confirming the insured name, the policy period, the limit of indemnity, the basis of cover and (where requested) the retroactive date. Some clients require the certificate to be issued in a specific format, naming them as a relying party or adding them as additional insured. Most brokers can issue evidence within 24 to 48 hours; advance notice for tender deadlines is sensible. The certificate is evidence of cover only; the wording controls what the policy actually does.
Can my client require uncapped PI?
A client can ask, but it cannot generally be delivered. UK PI policies always have a limit; an "uncapped" liability accepted in a contract is uncapped against the firm's own assets, not against the insurer. Accepting uncapped liability is a serious commercial decision and is one of the things a PI insurer will ask about at proposal — uncapped contractual liability can affect cover and pricing. Where a client insists, the response is usually to negotiate a cap at the insured's PI limit, with appropriate carve-outs for fraud, death, personal injury, IP infringement and confidentiality breach.
What is a "warranty" in a PI policy?
A warranty in insurance law is a contractual promise by the insured that something is true or will be done — for example, that all professional staff are appropriately qualified, that file reviews are conducted to a standard, that conflict checks are run. Under the Insurance Act 2015, breach of warranty suspends rather than terminates cover, but cover only resumes if the breach is remedied. Warranties matter: a careless warranty acceptance at proposal can come back to bite at a claim. Read every warranty clause and confirm you can meet it.
Working with a broker
What does a PI broker actually do?
A PI broker: takes instructions on your firm's risk profile; identifies a panel of insurers with appetite for your profession and size; prepares a presentation to underwriters; negotiates terms; advises on wording differences between markets; presents quotes with explanations of differences; advises on appropriate limit and excess; helps with the proposal form; manages mid-term changes; supports notification of claims and circumstances; advocates with the insurer on coverage and claims handling; and reviews run-off and retroactive arrangements at structural change. The broker is your representative in the insurance market, not the insurer's.
Is the broker paid by me or by the insurer?
Both models exist. Commission-based remuneration means the broker is paid by the insurer out of the gross premium — the commission rate is usually disclosed on request and is included in what you pay. Fee-based remuneration means you pay the broker an agreed fee and the broker arranges the policy at a net premium without commission. Some larger firms move to fee-based to align broker incentives. For most small and mid-sized firms commission-based remuneration is normal. Either way, the broker is required by FCA rules to act in the client's best interests.
How do I choose a PI broker?
Look for: sector experience in your profession (not just general commercial broking); access to the specialist PI markets — there are perhaps fifteen to twenty insurers that write significant UK PI, and a broker should deal with the credible ones; technical capability to discuss wording differences and not just price; claims advocacy track record; FCA authorisation and (ideally) Chartered Insurance Broker status. Check references from peer firms. Avoid brokers who refuse to disclose their commission or who can only quote one or two markets — that is a sign of limited market access.
Should I get more than one PI quote?
Generally yes, but with care. Multiple uncoordinated approaches to insurers — by you, by a current broker and by a prospective broker — can lead to multiple submissions to the same underwriter, which underwriters dislike and which can trigger a "blocking" of the risk. The disciplined route is to give one broker a "broker of record" letter for a defined market panel and another broker for a different panel, or to invite tenders from two brokers with a defined process. A good broker will set this out before quoting.
What is a "broker of record" letter?
A broker of record letter is a written authorisation from the insured to an insurance market or insurer confirming which broker is appointed to represent the insured for a specific policy or class of business. It enables the broker to obtain quotes, share information and bind cover on the insured's behalf. Brokers usually require a broker of record letter before approaching markets on a competitive renewal. Issuing one to multiple brokers for the same market on the same risk creates confusion and is usually avoided.
Can I change PI broker mid-policy?
Yes, but the practical value depends on timing. Changing broker outside the renewal window means the new broker takes over administration of an existing policy negotiated by someone else — the only useful work is mid-term change administration and (importantly) claims advocacy. The biggest benefit comes when the new broker handles the next renewal. If service from the current broker has broken down, change earlier; otherwise plan the transition into the renewal cycle.
What does "duty of fair presentation" mean?
The Insurance Act 2015 introduced the duty of fair presentation: at proposal and renewal, the insured must disclose every material circumstance it knows or ought to know, and must do so in a clear and accessible manner. "Material" means anything that would influence a prudent underwriter's decision to accept the risk or set the premium. The duty is owed by senior management and those responsible for arranging the insurance. Breach of the duty gives the insurer remedies ranging from premium adjustment to (in serious cases) avoidance.
Specific scenarios
Do I need cyber insurance if I have PI?
Usually yes — they cover different things. PI responds to a client claim against you for financial loss caused by professional negligence; cyber responds to your own losses from a cyber event (ransomware, data breach, business interruption) and to third-party claims for breach of data protection law. A data breach can give rise to claims under both policies, and modern brokers structure cyber and PI to dovetail rather than duplicate or leave a gap. Most professional firms now buy both — for many sectors a standalone cyber policy is far more useful than the small cyber sub-limit some PI policies include.
Does PI cover a contract dispute with a client?
PI covers civil liability for negligent acts, errors and omissions in the provision of professional services. A contract dispute about scope, fees or delivery — without an allegation of negligence — is often outside the policy. A contract dispute that does include an allegation of negligence or breach of professional duty will usually be covered (subject to wording). Disputes purely about your fees are typically excluded under a "fees exclusion". The line between a fee dispute and a negligence claim can blur quickly; brokers see plenty of both.
Does PI cover a complaint to my regulator?
Pure complaints — without a financial loss element — usually do not trigger the PI insuring clause, but most modern PI wordings include a regulatory defence costs sub-limit that pays legal representation at a regulator's investigation. The sub-limit is typically £25,000 to £250,000. Where the complaint is also accompanied by, or develops into, a damages claim from the client, both heads engage. Treat any regulator letter as an early-warning trigger — tell your broker before responding, even if the complaint looks defensible.
Does PI cover discrimination or harassment claims?
Discrimination and harassment claims by employees are normally covered under Employment Practices Liability (EPL) cover, not PI. Discrimination claims by clients alleging discriminatory provision of professional services may fall under PI in some wordings, but they often sit awkwardly between policies. EPL is usually bought as a section of management liability cover or as a stand-alone. Firms with significant client-facing or hiring activity should review the boundary between PI, EPL and D&O at renewal rather than assume one policy catches everything.
Does PI cover IP infringement?
Some wordings include cover for unintentional infringement of third-party intellectual property rights as part of professional services — the consultant who unwittingly uses someone else's copyrighted code, the architect whose design closely resembles a protected work. Many wordings exclude IP infringement or sub-limit it. IT, creative agencies and consultancies should specifically check the IP position. Standalone "media and IP liability" cover is available for higher-risk activities; for many firms the PI sub-limit is adequate but it must be confirmed.
What is "Defective Premises Act" exposure for my firm?
The Defective Premises Act 1972 imposes duties on those who work on dwellings; the Building Safety Act 2022 extended the limitation period for claims under the Act to fifteen years prospectively and (controversially) to thirty years retrospectively in certain cases. For architects, engineers and surveyors involved in residential design or construction, this dramatically extends the tail of potential claims. PI insurers have re-priced and in some cases withdrawn from this market. Firms with material dwelling exposure should hold dedicated discussions with their broker at every renewal.
Does PI cover claims from third parties (not just my client)?
It depends on the wording. Some PI policies respond only to claims by the firm's clients; better wordings respond to claims by third parties who relied on the firm's work — for example, a lender who relied on a surveyor's valuation, a purchaser who relied on an accountant's report on a target. Third-party reliance is one of the bigger sources of PI claims for valuation, due diligence and audit work. Check the definition of "claim" and "client" in the wording.
Does PI cover the cost of putting work right?
Generally no. The cost of redoing or rectifying your own defective work is normally excluded — the policy responds to the client's loss, not to the cost of repeating the contract. Some wordings include a "mitigation costs" extension that pays reasonable costs of avoiding a larger claim — for example, redoing a piece of work to head off a £200,000 client claim. The extension is usually sub-limited and requires insurer consent. The general principle: PI is not a quality-control budget.
Does PI cover loss of client money?
No. Loss of client money through theft, dishonesty or error is the realm of Crime cover (sometimes called Fidelity), regulatory client account compensation schemes (for solicitors and accountants), or — for some narrow circumstances — the firm's own indemnity. Where a firm's negligence allows a third party to access and steal client money, the firm may face a PI claim from the client; cover for this depends heavily on the wording. Strong client-money controls and appropriate Crime cover are the proper response, not reliance on PI.
What is "social engineering" cover and does PI include it?
Social engineering — phishing, fake invoice scams, CEO email fraud — is the practice of deceiving an employee into transferring money or data to a fraudster. It is rarely covered by PI (which excludes dishonesty by the insured and usually does not respond to first-party losses). It is sometimes covered by cyber policies, often by Crime policies with a specific social-engineering extension, and increasingly by stand-alone fraud cover. The growth of social engineering fraud — particularly in legal and accountancy — has made this a key broker conversation in the last two years.
Does PI cover work done by an in-house team for a parent group?
Most PI policies define "professional services" as services provided to clients — external parties. Work done by an in-house team for its own group is often excluded unless the policy is specifically extended for that purpose. Captive in-house consultancies, in-house legal teams and finance shared-services functions therefore need careful policy review, and may need a bespoke arrangement. The exclusion is rarely visible until a parent claims a subsidiary team's error caused group-level loss.
Can PI cover transfer to a buyer if I sell my firm?
The novation of a PI policy to a buyer is unusual; the more common arrangements are either (a) the buyer extends its own PI to cover historic acts of the seller (a "BlockAcquisition" endorsement or similar) or (b) the seller buys stand-alone run-off cover for the pre-completion tail. Either route works if priced into the deal; the wrong route — or no agreement at all — leaves the selling principals personally exposed for claims that surface after completion. Insurance terms should sit alongside legal terms in any sale negotiation.
What is a "successor practice" provision?
Used in the legal profession in particular, a successor practice provision says that a firm taking over the business of another firm "succeeds" to that firm's insurance position — the successor firm's PI policy covers historical acts of the predecessor firm, and the predecessor does not need separate run-off. The SRA's Minimum Terms include successor practice rules. The provision can be helpful but is sometimes triggered inadvertently, leaving the successor firm with unexpected historic exposure. Sale and merger agreements should address this explicitly.
Does PI cover a court judgment in a foreign jurisdiction?
Depends on the policy's jurisdiction clause. Most UK PI policies will respond to judgments in UK courts and (often) in courts of the European Economic Area; US and Canadian judgments are typically excluded or subject to specific endorsement because of the very different damages regime. Worldwide jurisdiction extensions are available for an additional premium where the work justifies it. If your work is exposed to claims in particular jurisdictions, raise this explicitly at proposal — assumptions are routinely wrong.
Does PI cover an injunction or specific performance order?
Most PI policies cover damages and defence costs — not orders for specific performance, injunctions or other non-monetary remedies. The legal cost of defending an application for such an order may be picked up as defence costs, but the cost of complying with the order itself is normally not insured. Where injunctive risk is material — confidentiality breaches, IP disputes — the position should be checked with the broker and, where necessary, supplemented with specific cover.
What should I do if a client threatens to sue me?
Three steps, in order: stop responding to the client without taking advice; tell your broker the facts in writing the same week; and instruct the broker to notify the insurer as a circumstance or claim. The temptation to "fix it" with the client directly before involving the insurer is the most expensive mistake firms make. Most PI policies require notification before defence steps are taken; informal settlements without insurer consent can be excluded from cover. Even apparently small threats can develop, and early notification preserves all options.
About Apex Insurance Brokers
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority, FCA firm reference 724952. Registered in England and Wales, Companies House 07014570. Trading address: c/o QCS, 53 Queen Charlotte Street, Bristol BS1 4HQ. Registered office: c/o Westcan, 5 Anglo Office Park, Bristol BS15 1NT. Email info@apexinsurancebrokers.co.uk, telephone 0117 325 0027. Last reviewed: May 2026.