What drives the cost of technology PI insurance?

Reviewed by Matthew Bartlett, Director, Apex Insurance Brokers Limited · Last reviewed 2026-08-06

If you run an IT business or work as a technology contractor, you have probably noticed that two firms doing "roughly the same thing" can be quoted very differently for professional indemnity cover. That is not underwriters being random. Technology PI is priced on exposure, and every one of the factors below shifts an insurer's view of how likely a claim is and how expensive it could be. This page walks through what those factors are and why they matter, so that when you ask for a quote you understand what is moving the number — and what you can influence.

One point of vocabulary first, because it trips people up. Technology professional indemnity (often shortened to "tech PI") and technology errors & omissions ("tech E&O") are broadly the same cover. E&O is simply the term more common in the United States. If a US client asks you to carry "E&O", they are asking for what a UK broker calls technology PI. You are not being asked to buy a second, separate product.

What exactly does technology PI insurance pay for?

Before the cost factors make sense, it helps to be clear on what the cover is for. Technology PI responds when a client alleges that your work caused them a financial loss — that your software was defective, your advice was wrong, a project overran or failed, you missed a specification, or your service fell short of what was promised. It is designed around the reality that IT work blends professional advice with a delivered product, and a single mistake can ripple through a client's business. The policy typically funds your legal defence as well as any damages or settlement, which matters because defending an allegation can cost real money even when you have done nothing wrong.

Worth stating plainly: professional indemnity is not a statutory legal requirement for IT firms. There is no law that says an IT company must hold it. In practice, though, it is almost always a contractual requirement — client contracts, framework agreements and recruitment agencies routinely demand a specific level of PI before they will let you start work. So while nothing forces you to buy it, the work you want may not be available without it. If you are weighing up the broader picture, our guide to what insurance an IT company needs puts PI alongside the other covers most tech firms carry.

Which services and products push the price up?

This is usually the single biggest driver. Underwriters look closely at what you actually deliver, because the risk profile of a WordPress agency is not the risk profile of a firm writing payment-processing software or software that controls physical equipment. The more central your work is to a client's revenue, safety or compliance, the greater the potential loss if it goes wrong — and the more that exposure is reflected in your premium.

Some patterns that tend to raise the assessed risk:

• Bespoke development and integration work, where a defect can halt a client's operations, versus lower-touch support or resale.
• Software or systems that handle money, health data, or safety-critical functions.
• Consultancy that clients rely on to make significant business decisions.
• Products sold at scale, where one flaw is replicated across many customers at once.
• Work involving artificial intelligence or automation that makes decisions with limited human oversight.

None of these makes you uninsurable — they simply mean the underwriter is pricing a bigger "what if". Describing your work accurately, rather than under-stating it, is genuinely in your interest here: a policy priced on the wrong description of your activities may not respond the way you expect when you need it.

Why does turnover affect my premium so much?

Turnover is a proxy for scale of activity. More revenue generally means more projects, more clients, larger contracts and therefore more opportunities for something to go wrong — and larger potential losses when it does. That is why proposal forms ask for it, and why underwriters weigh it heavily.

What matters is that the figure you give is realistic and, ideally, forward-looking. Insurers usually want your projected turnover for the coming year, not last year's accounts. If your revenue jumps materially mid-term — you win a large contract, take on a big new client, or expand into new services — tell your broker rather than waiting for renewal. Cover priced on a much smaller business may leave a gap exactly when your exposure has grown.

Larger or more complex risk? Speak directly to a director — call 0117 325 0027 or email info@apexinsurancebrokers.co.uk.

How does the limit of indemnity change the cost?

The limit of indemnity is the maximum the policy will pay. A higher limit means the insurer is potentially on the hook for more, so it costs more — though not in a straight line. Doubling your limit rarely doubles your premium, because the largest claims are less frequent than smaller ones. Illustrative options you will often see are £1m, £5m and £10m, but the right figure is dictated less by preference and more by two things.

First, your contracts. Many client and agency agreements specify a minimum limit — commonly £1m, £2m or £5m — and you simply have to meet it to win the work. Second, your genuine worst-case exposure: the size of the projects you take on and the loss a client could plausibly suffer if your work failed. Buying the smallest limit a contract allows can be a false economy if a realistic claim would exceed it. The goal is a limit that covers your real risk and satisfies the clients you actually want, not the cheapest box you can tick. If you want to go deeper on the product itself, see our overview of technology professional indemnity insurance.

Why does US client work raise the cost?

This is one of the biggest swing factors for UK tech firms, and it catches people out. If you have clients in the United States, or your software is used there, your exposure changes significantly — and so does your premium.

The reason is the US legal environment. Litigation is more common, damages awards can be substantially larger, and legal defence costs are typically far higher than in the UK. An insurer covering US exposure is pricing for a jurisdiction where claims are both more likely to be brought and more expensive to resolve. Canada is often treated similarly. So a firm serving only UK and EU clients will generally see a lower premium than an otherwise-identical firm with meaningful US work.

This does not mean you should avoid US clients — it means the cover needs to be arranged with those territories properly in mind, and priced honestly. Trying to keep US exposure off the policy to save money is a serious mistake: a claim from a territory your policy excludes may not be covered at all. Tell your broker exactly where your clients are and where your product is deployed.

How do claims history and contracts move the number?

Underwriters read your past as a guide to your future risk. A clean claims record works in your favour; previous claims or circumstances that could give rise to one will usually push the price up and prompt more questions. Honesty here is non-negotiable — you must disclose known issues, and failing to can void the cover you are paying for.

How you contract with clients matters just as much, and it is one area you can actively improve. Firms that trade on clear written terms of business — with a defined scope of work, sensible limitations of liability, acceptance and sign-off procedures, and realistic promises — present a lower, more manageable risk than firms working on handshakes and open-ended obligations. Good contracts reduce ambiguity about what you agreed to deliver, which is exactly where technology disputes tend to start. Underwriters notice, and it can help both your price and the breadth of cover you are offered. If your terms are thin or inherited from a template you have never reviewed, that is worth a conversation before renewal.

What about cyber, and where does IR35 fit in?

Two things frequently get tangled up with technology PI, so it is worth untangling them here.

Cyber insurance is a different, complementary cover. Technology PI responds to claims that your work harmed a client; cyber responds when your own systems and data are attacked or breached. Cyber is designed to fund breach response, business interruption and third-party liability. One important caution: do not assume cyber insurance pays regulatory fines. The insurability of UK GDPR and data-protection fines is legally uncertain and is often excluded or restricted, so treat cyber as covering the response and liability side, not as a way to pass on a fine from the Information Commissioner's Office. Many tech firms carry both PI and cyber, and buying them together can make sense — our guides to cyber insurance and combined technology PI and cyber cover explain how they fit together.

IR35 is a completely separate issue. It is a tax matter — the off-payroll working rules that determine your employment status for tax purposes. Holding insurance does not change, determine or improve your IR35 position in any way; the two are unrelated. If you are a contractor working through your own company, get your IR35 status assessed by a qualified accountant or tax adviser, not by reference to any policy you hold. And remember that once you employ staff, Employers' Liability insurance is a legal requirement under the Employers' Liability (Compulsory Insurance) Act 1969, subject to narrow exceptions — that one genuinely is compulsory, unlike PI.

So how do I get an accurate price?

Because the cost is built from all of these factors interacting, no honest broker can quote a technology firm off a headline rate — and you should be wary of any that try. The way to get a number you can rely on is to give an accurate picture of your business: what you deliver, your projected turnover, the limit your clients require, where those clients are based, your claims history and how you contract. With that, the cover can be shaped to your actual exposure rather than a generic template.

If your situation is straightforward, you can start online. If it is not — significant US work, unusual services, past claims, or contracts you are unsure about — it is usually quicker and cheaper in the long run to speak to an Apex specialist who works with technology firms, so the policy is right first time. Contractors in particular may find our IT contractor insurance guide a useful starting point.

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This article is general information, not advice on a specific policy or a recommendation to buy any product.