Reviewed by Matthew Bartlett, Director · Last reviewed 8 July 2026
Incorporating a professional practice as a limited company or converting a partnership to an LLP is a well-trodden path. It brings limited liability for shareholders and members, a distinct legal person for contracting, and a cleaner separation between owner and business. What it does not do is remove the need for professional indemnity cover, and it does not by itself insulate directors or members from personal claims for professional negligence. This entry explains why a Ltd or LLP still needs PI, how directors sit in the insured population, and how regulators approach corporate entities.
A limited company or LLP is the contracting party for its clients, so a claim for defective advice or negligent work is a claim against the company. Without PI in place the company itself is exposed — its cash, its debtors, its book of work in progress, and its future ability to trade. For a regulated profession, PI is not just prudent; it is a condition of continued authorisation. Trading without the required cover is a regulatory breach independent of whether any claim ever arises.
Incorporation also raises the underwriter's expectations of the risk management wrapper — documented procedures, engagement letters, file review protocols, compliance oversight. Insurers read those signals as a proxy for how the firm handles the day-to-day.
The corporate veil protects shareholders (and, in an LLP, members) from company debts. It does not protect a director or member who has personally advised or acted negligently. In the professional negligence context claimants routinely sue both the company and the individual signing off the work, and courts have been willing to hold directors personally liable where the individual owed a duty of care to the claimant and breached it.
PI is written to respond to both routes — the corporate defendant and the individual professional named on the file — so long as the policy is worded correctly and the individual falls within the definition of "insured". Where directors or members work under the firm's name and instructions, the policy usually picks them up automatically. Where a director conducts work in a personal capacity or through a separate vehicle, the position is more complex and worth checking with the broker before the work is taken on.
Most PI wordings define the insured to include the named entity and its directors, officers, partners, members and employees while acting on the firm's behalf. That is the ordinary position. What varies is:
Whether cover extends to former directors and members in respect of work done during their tenure. Whether non-executive directors and consultants are picked up automatically or need to be named. Whether cover responds where a director is sued in a shadow-director or de-facto capacity. Whether the policy allocates costs where a director is sued individually alongside the firm.
These are wording points rather than pricing points, and the safest place to settle them is at inception rather than after a claim lands.
Regulators write PI rules that generally apply to the practice regardless of legal form, but there are places where entity type changes the calibration:
The SRA Minimum Terms and Conditions apply to LLPs, incorporated legal practices and sole practitioners in England and Wales, with different minimum-limit thresholds where the firm has recognised body status. RICS Rules of Conduct Rule 9 applies the turnover-band calibration to every regulated firm irrespective of entity. ICAEW Bye-law 61 turns on the practice's fee income rather than its legal form. ARB Standard 8 is a personal duty on each ARB-registered architect and applies through whatever practice vehicle they operate. Financial advisers under FCA IPRU-INV 13 must meet the PII rules applied by their permissions, which apply to sole traders, LLPs, and limited companies alike.
Practitioners incorporating a previously unincorporated practice sometimes assume the PI position moves cleanly across on the incorporation date. It rarely does. The change of legal entity is a material variation to the policy (Insurance Act 2015 s.3 duty of fair presentation continues) and the underwriter will want to consider the new entity, transfer or endorse the policy, and clarify how prior-practice liability is handled — either by continued cover on the old entity, run-off, or a step-in arrangement on the new policy.
PI covers professional advice and services to third parties. Directors' and officers' (D&O) liability cover is a separate line responding to claims against directors for wrongful acts in the running of the company — breach of statutory duty, mismanagement, employment-practice-related claims by the company itself, and so on. Regulated professions often need both, particularly where the corporate entity has external investors, employees, or a compliance oversight function. A named broker can walk through where the lines sit and where the wordings overlap.
Apex Insurance Brokers is authorised and regulated by the Financial Conduct Authority (firm reference 724952). We place PI cover for limited company and LLP practices across solicitors, accountants, surveyors, architects, engineers, IT consultants, financial advisers and management consultants with Lloyd's syndicates and specialist company markets. A named broker reads the wording, checks how directors and members sit in the insured definition, and manages incorporations and entity conversions as material variations. Ninety-five per cent of our clients renew with us the following year.
Trading as a limited company or LLP
Have the wording read by a broker, not a portal. A named broker reads every submission and comes back with terms within one working day.