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Professional indemnity explained
A declared business description is the statement of your professional activities that you give an insurer and that the policy uses to define what work is covered. It matters because a claim from work outside that description may not be covered at all.
Part of: Professional indemnity insurance
In short
Professional indemnity policies cover the professional business you described when you bought or renewed cover, usually through a business description or a defined list of activities. If you take on new types of work and do not tell your insurer, a claim arising from that work may fall outside cover entirely, or the insurer may argue you breached the duty of fair presentation under the Insurance Act 2015. The safest approach is to tell your broker before you start new kinds of work, so the policy can be updated mid-term if needed.
Your professional indemnity insurance is built around the work you told the insurer you do. Most policies define the insured professional business in the schedule, often by reference to your proposal form, and only claims arising from that business are covered. If your firm drifts into new services without updating the description, claims from the new work may not be covered, subject to the exact wording.
Two separate problems can arise, and it helps to keep them apart:
Under section 3 of the Insurance Act 2015, a business must make a fair presentation of the risk before the contract is entered into. That means disclosing every material circumstance it knows or ought to know, or at least enough to put a prudent insurer on notice to ask questions. Section 2 applies the same duty to variations of a policy, so the duty bites again when you ask to change cover mid-term. Our guide to the duty of fair presentation explains it further.
If the insurer shows it would not have written the policy, or would have done so on different terms, the remedies are set out in Schedule 1:
| What the insurer shows | Usual remedy under Schedule 1 |
|---|---|
| Breach was deliberate or reckless | Insurer may avoid the policy, refuse all claims and keep the premium |
| It would not have written the policy at all | Insurer may avoid the policy and refuse claims, but returns the premium |
| It would have written it on different terms, such as an exclusion | Policy is treated as if those terms applied |
| It would have charged a higher premium | Claims are reduced proportionately |
See our page on remedies for breach for worked examples. Even where fair presentation is satisfied, a scope problem can still defeat a claim, because the Act does not extend cover to activities the policy never included.
Scope creep is rarely a deliberate decision. It usually starts with a client asking for one extra thing.
| Declared business | Work that often creeps in | Why insurers care |
|---|---|---|
| IT consultant | Writing and hosting bespoke software | Product and data exposures differ from advice |
| Architect | Design and build, project management or principal designer roles | Different contractual risk and building safety duties |
| Accountant | Investment or pension advice | Regulated financial advice is usually excluded or separately rated |
| Management consultant | Recruitment, interim management or implementation | Liability for outcomes, not just advice; see consultant scope creep |
| Building surveyor | Valuation work for lenders | Valuation is a distinct, higher risk activity |
| Engineer | Fire engineering or cladding advice | Commonly subject to specific exclusions |
Some policies use a defined list of permitted activities; others use a broad description. Our page on civil liability versus named activities wordings compares them.
Illustrative example 1. A marketing consultancy insured for strategy and campaign advice starts building e-commerce sites for clients. A client sues after a payment page fails. The insurer points out that web development was not part of the declared business, and the claim may sit outside cover.
Illustrative example 2. An accountancy practice tells its broker at renewal that it has started a small amount of corporate finance work. The insurer adds it, perhaps with a higher premium. A later corporate finance claim is handled in the usual way, subject to the terms.
Illustrative example 3. An engineer had been giving fire strategy advice for a year but left it off the renewal proposal. If the insurer shows it would have excluded fire work, the policy may be treated as if that exclusion applied.
Adding an activity part way through the policy year is normally straightforward if you raise it before the work starts. The insurer will usually want to know:
The insurer may agree to include the activity at no extra cost, charge an additional premium, add a specific excess or exclusion, or decline. If it declines, you may need separate cover for that work, or a different insurer for the whole practice. Our page on PI declined or referred explains the options. Whatever the outcome, keep the endorsement or written confirmation with your policy documents, because that is what a claims handler will look at if a claim arises.
Apex arranges and adjusts PI cover for UK professionals as their services change; a broker reads every enquiry.
Not necessarily. PI usually covers the professional business described in your schedule or proposal. If a new service falls outside that description, claims from it may not be covered. Tell your broker before you start, so the insurer can confirm cover or adjust the policy, sometimes for an additional premium.
Usually, yes. Most insurers will consider a mid-term adjustment to add an activity, change the fee split or increase the limit. The duty of fair presentation applies to the variation, so you should give accurate information about the new work. Get the change confirmed in writing.
Under the Insurance Act 2015 the outcome depends on what the insurer would have done. If it would have charged more, claims may be reduced proportionately; if it would have added an exclusion, that may apply; if it would not have offered cover at all, it may avoid the policy and return the premium.
No. Scope creep is about whether the policy covers the activity at all. Non-disclosure is about whether you told the insurer what it needed to know before cover started or changed. A claim can fail on scope even where the presentation was fair, so both need checking.
Usually when a claim is made. Claims handlers compare the work that led to the claim with the business description and proposal form. If it does not match, the insurer may question whether the activity is covered and whether the presentation was fair. That is why it is better to raise new work before it starts.
Tell us what your business does, your turnover and any claims. A broker reads every enquiry and comes back with options. No fee for a quote. Or call 0117 325 0027.
Get a PI quote Request a callbackApex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information, not advice on your individual circumstances, and it does not guarantee that cover will be available or on what terms.
