Single-Project PI Insurance in the UK: How It Works and When to Use It

Some contracts call for professional indemnity cover dedicated to one project rather than the firm’s annual policy. Here is how project-specific PI works, when it makes sense, and what to watch on the run-off tail.

What single-project PI insurance actually is

Most professional indemnity insurance is written as an annual practice policy: one policy covering everything the firm does, renewed each year, responding to claims first made during that policy period. Single-project PI turns that model on its head. Instead of insuring the firm, it insures the professional services delivered on one named project — a specific development, a specific contract, a specific piece of work — usually for the duration of the project plus an extended reporting period after practical completion.

The policy is bought for the project, sits alongside the project, and its limit of indemnity is dedicated to that project alone. Nobody else’s claims erode it, and claims from that project don’t erode the cover protecting the rest of your practice.

How it differs from annual practice cover

The differences are structural rather than cosmetic, and they matter when you’re deciding which route to take:

• Scope. An annual policy covers the whole book of work; a project policy covers one defined scope of services on one defined project. Work outside that scope falls back on whatever annual cover exists.
• Dedicated limit. On an annual policy, a bad year elsewhere in the practice can exhaust the limit that a particular client was relying on. A project policy ring-fences its limit for the project’s beneficiaries.
• Term. Annual cover has to be renewed — and could, in theory, lapse, shrink or become unaffordable in a hard market years before a latent design problem surfaces. A project policy is typically placed for the construction period plus a pre-agreed discovery period, so the cover the employer negotiated at the start is the cover that exists at the end.
• Who arranges it. Annual PI is bought by each consultant for itself. Project PI is often procured by the employer, developer or the project vehicle, covering the whole professional team — sometimes including the contractor’s design liability — under one policy.

When single-project PI tends to be used

Joint ventures and special purpose vehicles

A JV or SPV created to deliver one development often has no trading history, no annual turnover to rate, and will be wound up once the project completes. An annual practice policy is an awkward fit for an entity like that. A project policy matches the insurance to the life of the vehicle, and gives funders and purchasers comfort that cover won’t evaporate when the SPV is dissolved.

One-off contracts that dwarf the annual book

If a firm that normally handles modest commissions wins a single contract far larger than anything else it does, insurers may resist raising the annual limit to a level driven by one job — or the premium for doing so may be disproportionate. Isolating the big contract on its own policy can be the cleaner answer, keeping the annual programme priced for the ordinary run of work.

Employer-demanded project policies

On larger schemes it is increasingly common for the employer or funder to insist on project-specific cover as a condition of appointment. Their motivation is straightforward: they want a known limit, held for their project, unaffected by the consultants’ other liabilities or future renewal decisions. If a contract in front of you demands project PI, that is a term to price into your bid, not an optional extra.

Consortia with mixed insurance strength

Where a professional team spans firms with very different annual programmes, a single project policy puts everyone on a common footing and avoids arguments later about whose policy responds first and to what level.

The run-off tail: what happens after completion

PI is claims-made cover, and design or advice defects on construction projects often emerge years after handover. That is why the extended reporting period — the run-off tail built into the project policy — is the single most important term to negotiate at placement.

Points to think through with your broker:

• Length of the tail. The discovery period should be considered against the limitation position for the contracts involved — simple contracts and deeds carry different exposure horizons, and collateral warranties can extend who is able to claim. The right length is a project-specific judgement, not a standard number.
• Paid up front. Ideally the premium for the full term including the tail is paid at inception, so no future decision, insolvency or market hardening can cut the cover short.
• Non-cancellable terms. The value of project PI to employers and funders rests on the policy staying in force; look hard at any conditions that could allow cover to fall away mid-term.
• Reinstatement and erosion. Understand whether the limit applies in the aggregate over the whole term and whether any reinstatement is available once claims start to erode it.

Trade-offs to weigh

Project PI is not automatically better. The whole-term premium is paid early, which affects project cash flow. The scope of insured services must be drafted carefully — anything ambiguous risks falling between the project policy and each firm’s annual cover. And once the aggregate limit for the term is spent, it is spent; there is no next renewal to refresh it. For routine commissions of ordinary size, a well-structured annual programme usually remains the sensible default.

Arranging it well

Insurers writing project PI will want the project particulars, the professional team and their scopes, the contract structure (including any warranties and third-party rights), the construction method and the programme. The earlier this is presented — ideally before appointments are signed — the more options exist. As an independent Bristol-based broker, Apex can review the contractual insurance requirements you’ve been handed, test whether project-specific cover is genuinely needed or whether your annual programme can be adapted, and approach the market either way.

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This page is general information, not advice; policy terms always take precedence.