What happens if my PI insurance lapses?

Reviewed by Apex Insurance Brokers · Last reviewed 2026-08-05

Professional indemnity (PI) insurance is not like your car or buildings cover, where a short gap simply means you were briefly at risk. The way PI is structured makes a lapse far more damaging than most professionals expect. This guide explains exactly what happens, why the timing of a claim matters more than the timing of the work, and what regulated firms in particular need to watch.

Why "claims-made" changes everything

Almost all UK PI policies are written on a claims-made basis. This means the policy that responds to a claim is the one in force on the date the claim is first made against you — not the policy that was in force when you did the work.

That single feature is the reason a lapse is so serious. Professional negligence claims often surface years after the advice was given: a client only discovers the problem when a transaction unwinds, an audit is challenged, or a building defect emerges. If your PI cover has lapsed by the time that claim lands, there is no live policy to notify — and the fact you were fully insured when you actually did the work does not help you.

Compare that with a "losses-occurring" policy (the basis used for most general liability cover), where the policy in force when the incident happened is the one that responds. PI does not work that way, which is precisely why continuity of cover matters so much.

Claims-made vs losses-occurring: the practical difference

The retroactive date trap when you re-insure

Suppose your PI lapses and, a few weeks or months later, you take out a new policy. You might assume you are back to normal. Often you are not.

Every PI policy carries a retroactive date — work carried out before that date is excluded. On a continuously renewed policy, the retroactive date usually reaches back to when you first took out cover, so your whole history stays protected. But when there has been a gap, an insurer may:

• Set the retroactive date at the new inception date, meaning none of your earlier work is covered;
• Exclude any known circumstances — matters you were, or ought to have been, aware of during the gap; or
• Decline the risk altogether, or price and structure it far less favourably, once there is a gap on the record.

The result is the same window of exposure: work done before the gap, and any problem that emerges during it, may sit permanently outside cover. That exposure does not go away when you buy a new policy — it follows you.

Run-off cover: the missing piece when you stop

Because cover is claims-made, the risk of past work being challenged does not end when you stop trading, retire, sell the business, or drop a particular service. This is what run-off cover is for: a continuation of PI that responds to claims made after you have ceased the activity, in respect of work done before.

If a policy simply lapses without run-off being arranged, there is no mechanism to catch those later claims. Many professional bodies set minimum run-off periods for their members precisely so that clients remain protected after a firm closes. Letting cover lapse rather than converting it to run-off can leave both you and your former clients exposed for years.

Talk to Apex about continuity, run-off and retroactive cover →

Regulated firms: a lapse can breach your rules

For many regulated professions in the UK, holding adequate PI is a condition of being allowed to practise, not just good risk management. Requirements vary by profession, but bodies including the Solicitors Regulation Authority (SRA), the Royal Institution of Chartered Surveyors (RICS), the Institute of Chartered Accountants in England and Wales (ICAEW), the Association of Chartered Certified Accountants (ACCA) and the Architects Registration Board (ARB) all set minimum PI requirements for their regulated members. Firms authorised by the Financial Conduct Authority (FCA) are also subject to prudential requirements that, for many, include holding PI cover.

If your cover lapses and you keep trading, you may be in breach of those rules from the moment the policy ends. Depending on your regulator, that can mean disciplinary action, conditions on your practice, or being unable to continue the regulated activity until compliant cover is back in place. In short, for a regulated firm a lapse is both an insurance problem and a compliance problem at the same time.

The commercial and contractual fallout

Even where PI is not strictly mandatory, a lapse tends to cause knock-on damage:

• Breach of client contracts. Many professional and commercial contracts require you to maintain PI at a stated limit (for example £1m, £2m or £5m) for the duration of the engagement, and sometimes for a period afterwards. A lapse can put you in breach.
• Lost work and tenders. Public-sector and larger private buyers routinely ask for evidence of current PI before awarding work. A gap can disqualify you.
• Personal exposure. Without a policy, a defence and any damages come out of the firm's — or your own — pocket. Defence costs alone can be substantial before liability is even decided.

Placing new cover: honesty about the gap matters

When you arrange or reinstate PI, the Insurance Act 2015 imposes a duty of fair presentation of the risk on commercial buyers. That means disclosing material facts — including any lapse, any circumstance that might give rise to a claim, and matters you became aware of during the gap. Getting this wrong can allow an insurer to reduce or refuse a claim later. A broker's job is to help you present the risk properly and to negotiate the retroactive date and terms so that as much of your history as possible stays protected.

What to do if a lapse is looming — or has happened

• Act before the renewal date. The cleanest outcome is never to let the policy expire in the first place — continuity preserves your retroactive date.
• If you have already lapsed, get advice immediately. The longer the gap, the harder it is to arrange cover that reaches back over your past work.
• Notify any known circumstances promptly under whichever policy is (or was) live, following its terms.
• If you are closing or changing the business, arrange run-off rather than simply letting cover fall away.

Common questions

Does my old policy cover a claim if the work was done while I was insured?

Not on its own. With claims-made PI, what matters is whether a policy is live on the date the claim is made. If the claim arrives after your cover has ended and nothing replaced it, there is generally no policy to respond — regardless of when the work was done.

Can I just buy a new policy to cover past work?

Sometimes, but not automatically. A new insurer may set the retroactive date at the new start date and exclude known circumstances, which can leave your earlier work and anything that emerged during the gap uninsured. This is why the retroactive date and continuity are so important to get right at placement.

I have stopped trading — do I still need cover?

Very likely, yes. Because claims can arrive years after you finish, run-off cover keeps you protected for past work after you cease trading. Many professional bodies also require run-off for a minimum period, so letting the policy simply lapse can breach your rules as well as leave you exposed.

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 reading your policy wording.