What is a limit of indemnity in professional indemnity insurance?

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

The limit is the insurer's ceiling, not your expected claim

Professional indemnity (PI) insurance protects you against claims that you were negligent in the professional services or advice you provided — for example, a mistake in a survey, a flawed design, a missed deadline, or negligent financial advice. The limit of indemnity is the ceiling on what the insurer will pay towards those claims, including any damages awarded against you and, depending on how the policy is structured, the legal costs of defending the claim.

It is not a prediction of what a claim will cost. It is the point at which cover stops. A single professional error can generate a claim far larger than the fee you earned for the work — a modest valuation error on a high-value property, or a design fault that a contractor has to rectify, can run into hundreds of thousands of pounds once losses and costs are added up. The limit exists to absorb that worst case, not the everyday one.

Per-claim vs aggregate: the distinction that matters most

The single most important thing to check on any PI schedule is how the limit is applied. There are two common structures.

"Any one claim" (each and every claim). The full limit is available for each separate claim during the policy year. If your limit is £1m any one claim and you suffer three unrelated claims of £1m each, the policy responds to all three. This is the stronger structure for the policyholder and is the standard basis on which many professions are insured.

"In the aggregate". The limit is the total the insurer will pay for all claims combined across the entire policy year. If your limit is £1m in the aggregate and one claim uses £800,000, only £200,000 remains for any further claim that year. Once the aggregate is exhausted, the policy provides no further cover until it renews.

Some policies mix the two — an "any one claim" limit for most work, but an aggregate limit for specific higher-risk activities such as asbestos, pollution, or certain surveys. Always read the schedule and the wording together, because two policies quoting "£2m" can offer very different protection depending on this single word.

Where do defence costs sit?

Legal defence costs can be substantial, sometimes rivalling the claim itself. How they interact with your limit is a second crucial detail:

• Costs in addition: defence costs are paid on top of the limit of indemnity. A £1m limit means £1m is available for the settlement, with reasonable defence costs paid separately. This is the more generous arrangement.
• Costs inclusive: defence costs are paid from within the limit. A £1m limit that funds £300,000 of legal costs leaves only £700,000 for the settlement itself.

Neither is automatically right or wrong, but you cannot judge whether a limit is adequate without knowing which basis applies. A larger costs-inclusive limit and a smaller costs-in-addition limit can end up offering similar real-world protection.

How to choose the right limit

There is no single correct figure — the right limit is specific to your profession, your clients, and the size of the projects or transactions you touch. Practical factors to weigh:

• Your worst realistic exposure. Think about the largest loss a single piece of your work could cause a client, not the size of your fee. The value of the asset, contract, or transaction you advise on usually matters far more than what you charge.
• Contractual requirements. Many client contracts, tender documents, and framework agreements specify a minimum limit you must carry — commonly expressed as a figure "per claim" or "each and every claim". Public sector and large corporate clients frequently require this, and you may be in breach of contract if you fall short.
• Regulatory minimums. If your profession is regulated, your regulator may set a floor (see below). This is a minimum, not a recommendation — the appropriate level for your practice is often higher.
• Aggregation risk. If several clients could bring related claims from the same underlying error, a single "any one claim" limit may need to be larger, or you may need a higher aggregate.
• Run-off. PI is usually written on a "claims made" basis, meaning it responds to claims made during the policy period regardless of when the work was done. When you stop trading you may need run-off cover to protect against claims arising from past work, and the limit matters there too.

Illustrative limits are typically offered in round figures such as £1m, £2m or £5m, but these are only starting points. A broker can help you map your actual exposure to an appropriate limit and structure rather than defaulting to the cheapest round number. Start a PI quote with Apex and we will talk it through.

Contractual and regulatory minimums

Two separate forces can dictate a minimum limit, and they operate independently of each other.

Contractual minimums come from the agreements you sign. Professional appointments, consultancy contracts, supplier frameworks and tenders often state a required PI limit — and sometimes require that it be maintained for a number of years after the work completes. Carrying less than the contract requires can leave you in breach even if you never have a claim.

Regulatory minimums are set by the body that authorises your profession, and they vary widely:

• Solicitors regulated by the Solicitors Regulation Authority must hold PI cover complying with the SRA Minimum Terms and Conditions, with a minimum limit of £2m for any one claim, rising to £3m where the firm is a limited company or an LLP.
• Chartered surveyors regulated by RICS must hold cover meeting RICS minimum terms, with minimum limits set on a sliding scale linked to the firm's turnover.
• Accountants in bodies such as ICAEW and ACCA are subject to minimum PI requirements typically calculated by reference to gross fee income, subject to a floor.
• Architects are required by the Architects Registration Board to hold adequate and appropriate insurance to cover their liability to clients.
• Regulated financial advisers and insurance intermediaries are subject to minimum PI requirements under FCA rules, which derive from the Insurance Distribution Directive and are set as minimum amounts per claim and in the aggregate.

Because these regimes differ so much, do not assume a figure you have heard applies to you — check your own regulator's current requirements, or ask a broker who places cover for your profession.

A quick worked comparison

Imagine two policies, both headlined "£2m", against a single claim that settles for £1.8m with £400,000 of defence costs:

• Policy A — £2m any one claim, costs in addition: the £1.8m settlement sits within the £2m limit, and the £400,000 of defence costs are paid on top. You are fully covered.
• Policy B — £2m in the aggregate, costs inclusive: the settlement and costs together come to £2.2m, but the insurer pays a maximum of £2m for everything that year. You fund the remaining £200,000 — and have no cover left for any further claim before renewal.

Same headline number, materially different outcome. This is why the structure behind the limit deserves as much attention as the limit itself.

Common questions

Is the limit of indemnity the same as the excess?
No. The limit is the maximum the insurer pays; the excess (or deductible) is the amount you pay towards each claim before the insurer contributes. They sit at opposite ends of the same claim — you fund the first slice, the insurer funds up to the limit.

What happens if a claim exceeds my limit of indemnity?
The insurer pays up to the limit and you are personally responsible for the balance, along with any related costs the policy does not cover. This is why setting the limit against your realistic worst case, rather than the cheapest option, matters.

Can I increase my limit mid-year?
Often yes. Insurers will usually consider increasing the limit during the policy year, sometimes prompted by a new contract that demands a higher figure. It is subject to underwriting and may affect the premium, so speak to your broker before you commit to a contract that requires more cover than you currently hold.

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

Choosing a limit of indemnity is one of the few PI decisions that is genuinely yours to make, and getting it wrong is expensive in both directions — too low and you carry uninsured risk, too high and you pay for cover you will never use. A short conversation about the size of the work you do is usually enough to land on the right figure. Talk to Apex about your PI cover.

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.