Professional indemnity (PI) insurance in the United Kingdom is written on a claims-made basis. The policy which responds is the one on cover when the claim is notified to the insurer, not the one on cover when the act, error or omission actually happened. That structural feature makes notification the pivot on which the whole policy turns, and it makes the circumstance notification one of the most consequential steps a firm takes with its insurer.
A claim is a demand for compensation, usually in writing. A circumstance comes earlier. In HLB Kidsons v Lloyd's Underwriters [2008] EWCA Civ 1206 the Court of Appeal treated a notifiable circumstance as a matter which the insured knows and which may give rise to a claim against it. Certainty is not required, and neither is probability. A real, appreciable possibility that a claim could follow is enough to engage the notification machinery in most modern PI wordings.
Typical triggers include a client complaint alleging error, discovery of a mistake in a completed transaction, a threat of proceedings, a regulator's request about a matter that could have caused loss, or an internal file review surfacing an issue. Silence from the client is not comfort — a circumstance can exist before the client has complained, provided the firm is aware of the underlying problem.
Because cover attaches at notification, a matter notified during the current policy year is captured by that policy. If the firm fails to notify and the same matter becomes a formal claim in a later year, the later policy will usually decline because the circumstance was known and undisclosed at renewal, and the earlier policy is off risk. Renewal is a further trap: the duty of fair presentation under sections 3 to 8 of the Insurance Act 2015 requires commercial insureds to disclose every material circumstance they know or ought to know. A withheld matter at renewal may entitle the insurer to remedies ranging from proportionate reduction to avoidance.
Most PI wordings state that notification within the policy period is a condition precedent to the insurer's liability. Courts take that language seriously. In McAlpine v BAI (Run-off) Ltd [2000] 1 Lloyd's Rep 437 failure to comply with a notification condition was fatal to cover. Read your own wording carefully. The clause will specify who the notice goes to, in what form, within what period, and with what content. Some wordings require notice "as soon as reasonably practicable"; others fix a hard longstop such as thirty days. Comply with whichever is stricter.
Notification is a written act. Email to the address specified in the schedule is generally sufficient; a follow-up through the broker is prudent. The notice should set out a factual chronology — dates, parties, the work performed, the alleged error, the sums potentially at stake — and identify the source of the firm's knowledge. It should be accurate rather than exhaustive: further information can follow as it emerges. Estimates of potential loss are helpful but should be marked as provisional. Do not admit liability; state what is known, not what is conceded.
Legal privilege is generally preserved by notification to the insurer in the ordinary course, because insurers and their appointed lawyers share a common interest with the insured. Care is still needed with attached documents: the position on onward disclosure to third parties should be checked before wider circulation.
The following is an illustrative worked example. It is not advice on any particular policy or matter.
In 2024 a mid-size solicitors' practice receives an email from a former client complaining that the firm's advice on a share purchase was inadequate. The email identifies the specific transaction, alleges negligence in drafting an indemnity, and threatens "further action" if the firm does not respond within twenty-eight days. No letter of claim has yet been served.
Applying HLB Kidsons, the email identifies a specific transaction, alleges negligence, and threatens further action. This is a notifiable circumstance. The firm notifies its PI insurer in writing within thirty days, setting out the chronology, the retainer scope, the disputed clause, and a preliminary loss estimate. Six months later a formal letter of claim arrives. Because the circumstance was notified during the 2024 policy year, cover attaches under the 2024 policy even though the claim itself is served in 2025. our claims notification page sets out what to send and where.
Late notification can breach a condition precedent and defeat the claim entirely. Non-disclosure at renewal can trigger the section 8 remedies. Silence on a known circumstance across a change of insurer can leave the firm uninsured for the matter altogether. Each outcome flows from the mechanics of claims-made cover working as designed.
For related concepts see warranty, condition precedent and representation and Insurance Act 2015 warranties reform. For sector guidance see the pillar pages for solicitors, architects, independent financial advisers and accountants.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. This entry is general information, not advice on any particular policy.