Professional indemnity explained

Received a letter of claim for professional negligence? What to do

Reviewed by the Apex broking team · Last reviewed 2026-10-31

A letter of claim is a formal pre-action letter in which a client sets out an allegation that your professional work was negligent and caused them loss. How you handle the first few weeks can affect both the outcome of the dispute and whether your PI insurance responds.

Part of: Professional indemnity insurance

In short

If you receive a letter of claim alleging professional negligence, notify your PI insurer through your broker before replying on the substance, and do not admit liability or offer money without its consent. In England and Wales the Pre-Action Protocol for Professional Negligence usually applies: acknowledge within 21 days, then the professional has three months from the acknowledgment to investigate and send a letter of response. Preserve every file, let the insurer appoint or approve solicitors, and never sign a standstill agreement or agree mediation terms without insurer agreement.

What to do first

If a client, former client or third party sends you a letter of claim alleging professional negligence, the first call is to your PI broker or insurer, not to the client. Most PI policies make prompt notification a condition of cover and say you must not admit liability, offer compensation or agree a settlement without the insurer's written consent. Replying to the substance on your own can put that cover at risk, subject to the policy terms.

In practice the first week looks like this:

Note the date you received it. Protocol time limits run from receipt, so record it.
Notify your PI insurer through your broker with a copy of the letter and any earlier correspondence. See PI notification: what and when.
Do not admit fault or offer money. A short, neutral holding acknowledgement is usually fine once the insurer has seen it.
Preserve the file. Emails, drafts, notes, calculations and version histories should be kept intact.
Let the insurer appoint or approve solicitors before you spend on defence costs you may want covered.

How the Pre-Action Protocol works

In England and Wales, most claims against professionals are expected to follow the Pre-Action Protocol for Professional Negligence. It aims to get the facts exchanged and the dispute settled before anyone issues court proceedings. Architects, engineers and quantity surveyors usually follow the construction and engineering protocol instead, and healthcare claims have their own protocol. See also our guide to the professional negligence protocol.

Step	Timescale under the protocol	What it means for you
Preliminary notice (optional)	Acknowledge in writing within 21 days of receipt	The claimant should ask you to tell your PI insurers straight away. Treat this as a notifiable event.
Letter of claim	Sent once the claimant believes there are grounds	Sets out the chronology, allegations, causation and an estimate of loss, and asks you to forward it to your insurers.
Acknowledgment	Within 21 days of receipt	A brief written acknowledgment, usually prepared with the insurer or panel solicitors.
Investigation	Three months from the date of the acknowledgment	You and your advisers investigate. Ask early and explain if you need more time; the protocol says reasonable extensions should be agreed.
Letter of response and letter of settlement	By the end of the investigation period	The response says whether the claim is admitted, partly admitted or denied. A settlement letter can make or invite proposals.
Negotiation	Aim to resolve within six months of the acknowledgment	If not resolved, the parties should agree within 14 days whether to extend; otherwise the claimant may issue proceedings.

The letter of claim is not a formal statement of case, but the protocol warns that courts may impose sanctions if later pleadings differ materially from the pre-action letters. That is one reason the letter of response is normally drafted by solicitors working with your insurer.

Your PI policy's claims conditions

PI wordings differ, but the claims conditions commonly include:

Notification of any claim, and often of circumstances that may give rise to one, within a set time or "as soon as practicable". Late notice can reduce or defeat cover depending on the wording; see consequences of late notification.
No admissions of liability and no offers, promises or payments without insurer consent.
Conduct of the claim passing to the insurer, including appointing solicitors and experts. See insurer conduct of claims and the QC clause.
Consent to settle provisions, sometimes with a "hammer" clause. See consent to settle and the hammer clause.
Your excess, which may apply to damages, defence costs or both. See what defence costs cover.

Because PI is usually written on a claims made basis, the policy that responds is normally the one in force when the claim is first made or notified, not the one in force when the work was done.

Limitation, standstill agreements and mediation

The protocol does not change limitation periods. If the claimant's time limit is close, they may ask you to sign a standstill agreement, which pauses time so the protocol can run without court proceedings. Alternatively, the protocol allows the claimant to issue proceedings and invite you to agree an immediate stay. Never sign a standstill agreement without your insurer's agreement: it changes your legal position and your insurer will want to control that decision. For time limits, see how long a client can sue for professional negligence.

The protocol says court should be a last resort and lists options including mediation, adjudication, early neutral evaluation and ombudsman schemes. Ignoring a reasonable invitation to use alternative dispute resolution can lead to costs consequences later. Your insurer will usually decide whether and when to mediate.

Illustrative examples

These examples are illustrative and not based on real cases.

Example 1: the quick reply. A management consultant receives a letter of claim and emails the client the same day saying "we accept the report was wrong and will put it right". The insurer later argues the admission breached the policy's no admissions condition. Whether cover is affected depends on the wording and the facts, but the dispute was avoidable.

Example 2: the earlier warning. An accountant receives a letter of claim about a tax return filed two years earlier. The client had complained by email at the time, but the firm never notified the insurer. The current insurer may point to the earlier knowledge, and the previous year's insurer may say it was never told. Notifying the original complaint as a circumstance would usually have avoided the gap.

Example 3: the standstill request. A surveyor's former client asks for a six-month standstill agreement. The surveyor passes it to the broker, the insurer's solicitors agree terms, and the protocol runs without court costs.

Common mistakes

Treating a letter of claim as a complaint to be handled in-house and only telling the insurer when proceedings arrive.
Sending a detailed rebuttal before the insurer has seen the file. It may be inconsistent with the eventual letter of response.
Contacting the claimant to "talk it through" and making concessions on the phone.
Deleting or tidying files, or altering documents after the event.
Instructing your own solicitor without insurer approval and then finding the costs are not covered.
Assuming a claim with no merit does not need notifying. Defence costs for weak claims are often the main part of what PI pays.

What to check with your broker

Which policy year the claim falls into, and whether anything was notified earlier as a circumstance.
The exact notification wording and any time limit in days.
Your excess and whether defence costs erode the limit of indemnity.
Whether the claim might aggregate with other claims from the same matter.
Whether your regulator expects you to report the claim separately.

For the wider picture of defending a claim, read being sued for professional negligence and our PI claim process step by step. To review your cover, see professional indemnity insurance.

Apex arranges professional indemnity insurance for UK firms; a broker reads every enquiry.

Sources

Frequently asked

Should I reply to a letter of claim myself?

Usually not on the substance. Notify your PI insurer through your broker first. A short acknowledgment within the protocol's 21 days is normally needed, but its wording should be agreed with the insurer or its solicitors. Many policies say you must not admit liability or make offers without consent, so an unguarded reply can create a coverage problem as well as a legal one.

How long do I have to respond to a letter of claim?

Under the Pre-Action Protocol for Professional Negligence you should acknowledge it within 21 days of receipt and then have three months from that acknowledgment to investigate and send a letter of response. Extensions can be requested, and the protocol says reasonable requests should be agreed. Your PI policy may set its own, shorter, notification deadline.

Will my PI insurer pay for a solicitor to deal with the letter of claim?

Commonly yes, once the claim is notified and accepted, subject to the policy terms and your excess. Insurers usually appoint or approve the solicitors. Costs you incur before notifying, or with lawyers the insurer has not approved, may not be covered, so check before instructing anyone.

What is a standstill agreement?

A standstill agreement is a written agreement between the parties that time stops running for limitation purposes for an agreed period. It lets the protocol and settlement talks continue without the claimant issuing court proceedings to protect their position. You should not sign one without your PI insurer's consent.

Does the protocol apply to architects and engineers?

Usually not. The Pre-Action Protocol for Professional Negligence excludes construction professionals such as architects, engineers and quantity surveyors, whose disputes normally follow the Pre-Action Protocol for Construction and Engineering Disputes. Healthcare claims also have their own protocol. The advice to notify your insurer first applies whichever protocol is used.

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Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information, not advice on your individual circumstances, and it does not guarantee that cover will be available or on what terms.