Professional negligence claim examples: what PI actually covers

Reviewed by Matthew Bartlett, Director, Apex Insurance Brokers Limited · Last reviewed 2026-08-05

Professional indemnity insurance is easiest to understand through what it does when something goes wrong. The abstract wording — "civil liability arising from the conduct of your professional business" — only means something once you see it applied. Below are realistic, anonymised scenarios across common professions, and a plain explanation of how a PI policy responds to each. None are named court cases; they are illustrative composites of the kinds of dispute UK brokers see regularly.

What "professional negligence" actually means

A professional owes clients a duty to work with the reasonable skill and care expected of a competent member of their profession — a standard reinforced by the Supply of Goods and Services Act 1982 for services, and by the common law of negligence. A negligence claim argues you fell below that standard and the client lost money as a result. PI insurance exists precisely for that risk. Crucially, it responds even when the allegation is weak or wrong, because defending yourself still costs money.

Almost all UK PI policies are written on a claims-made basis. That means the policy that responds is the one in force when the claim is made against you or when you first become aware of a circumstance likely to give rise to one — not the policy in force when you did the work. This is why continuity of cover, and notifying circumstances promptly, matter so much.

Claim examples by profession

A surveyor who under-values a building defect

A residential surveyor produces a homebuyer report and misses evidence of structural movement. Eighteen months later the buyer discovers significant subsidence and alleges the survey was negligently carried out, claiming the difference between what they paid and the property's true condition, plus remediation costs. PI covers the cost of appointing solicitors and a technical expert to test the allegation, and any settlement or damages agreed or awarded. Even if part of the defect was genuinely undetectable, the policy funds the defence needed to establish that.

An accountant who files an incorrect return

An accountancy practice misapplies a tax treatment and the client faces an assessment and penalties from HMRC. The client argues that competent advice would have avoided the additional liability and interest. PI responds to the defence and to the client's quantified financial loss — typically the interest and penalties that flowed from the error, rather than the tax that was always due. This distinction between "loss caused by the negligence" and "sums the client would have paid anyway" is central to how PI claims are valued.

An IT consultancy that delivers a failed system

A software consultancy is engaged to build a booking platform. It over-runs, the delivered system does not perform as specified, and the client terminates and claims wasted expenditure and lost revenue. The consultancy also faces an allegation that it lost a batch of the client's customer data. Here PI can respond on two fronts: the professional negligence claim over the defective work, and — where the wording includes it — breach of confidentiality or a cyber/data extension. Many technology PI policies bundle these; standard PI may not, which is why the wording matters more than the headline product name.

A designer accused of infringing intellectual property

A marketing agency produces a brand campaign and a third party alleges the artwork infringes their copyright. Strictly this is not "negligence" at all, but most PI wordings extend to unintentional infringement of intellectual property rights and to defamation. The policy funds the legal response and any damages, provided the infringement was not deliberate. Deliberate or dishonest acts are excluded — PI protects against mistakes, not misconduct.

A consultancy that gives advice outside its remit

A management consultancy advises on a restructuring and the client later argues the advice caused avoidable redundancy costs and lost contracts. Even where the consultancy believes it acted properly, the client can still issue proceedings. PI covers the defence and, if liability is established, the damages. This is the everyday reality of PI: the trigger is an allegation of loss, not proof of it.

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What PI typically covers — and what it does not

Two points are worth stressing. First, PI covers your defence costs even when you are ultimately found not liable — often the single most valuable feature, because unfounded claims still have to be seen off by solicitors. Second, exclusions and extensions vary between insurers. A "cyber" or "data" element that is standard in one technology wording may be absent or heavily limited in another, so read the schedule, not the brochure.

How much cover is enough?

The limit of indemnity is the maximum the insurer pays. Common illustrative options are £1m, £2m and £5m, but the right figure depends on the size of contracts you handle, the potential loss a single mistake could cause, and any minimum set by a regulator or professional body. Solicitors, accountants, architects and others often face minimum terms under their regulator's rules — for example, minimum PI requirements set by the SRA for solicitors or by RICS for surveying firms. If a client contract specifies a level of cover, that becomes a practical floor too.

Check whether your limit is offered on an "aggregate" basis (a single pot for all claims in the year) or "each and every claim" (the full limit available per claim), and mind the defence-costs treatment — whether they sit inside or on top of the limit materially changes how far your cover stretches.

What to do the moment a claim looks likely

• Notify your insurer or broker as soon as you become aware of a claim or a circumstance that could lead to one — late notification can prejudice cover under a claims-made policy.
• Do not admit liability, offer to redo work for free, or settle directly — that can breach policy conditions and jeopardise your cover.
• Preserve the file: emails, engagement terms, scope documents and file notes are what a defence stands on.
• Let the insurer's appointed solicitors lead. The policy pays for them for exactly this reason.

Common questions

Does PI cover me if the claim turns out to be baseless?

Yes. PI funds the cost of defending an allegation regardless of the outcome. Many claims are settled or dropped without any finding against the professional, but the legal work to reach that point is exactly what the policy pays for.

Will PI respond to work I did before I took the policy out?

It can, provided you had continuous cover and were unaware of any problem when the policy started. Because PI is claims-made, past work is covered by your current policy — but a "retroactive date" may limit how far back it reaches, so check that date on your schedule.

Is professional indemnity the same as public liability?

No. Public liability covers injury to people or damage to physical property. Professional indemnity covers financial loss caused by your advice or professional work. Many firms need both, as they respond to entirely different types of claim.

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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.