Professional indemnity insurance

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Professional indemnity (PI) insurance — sometimes called errors and omissions (E&O) cover — protects you if a client claims your advice, design, treatment or service caused them financial loss. It can pay legal defence costs and compensation, subject to policy limits, excesses and exclusions.

Unlike public liability, which deals with physical injury and property damage, PI responds to allegations of professional failings: negligent advice, poor workmanship standards, missed deadlines, breach of duty or failure to meet the standard of care expected in your profession.

What it typically covers

• Negligent advice or design — an architect’s plans contain an error that delays a build; a consultant’s recommendation causes a client loss
• Professional mistakes in service delivery — a beauty treatment goes wrong and the client loses income from time off work; a trade specification leads to costly rework
• Defamation, libel or slander — where included, claims arising from statements made in the course of professional work
• Loss of documents or data — on some policies, the cost of restoring or recreating lost client records
• Defence costs — solicitors and experts to defend a claim, even if it is eventually dismissed

What it usually does not cover

• Deliberate dishonesty, fraud or criminal acts
• Known circumstances or claims you were aware of before the policy started (unless disclosed and accepted)
• Physical injury to third parties — usually public liability
• Employee injury — employers liability
• Fines, penalties and punitive damages where not insurable by law

Medical professionals often need specialist malpractice cover rather than generic PI — our MMI 4u team arranges indemnity that meets regulator requirements.

Who typically needs PI?

• Consultants, designers, engineers and advisers who charge for expertise
• Trades offering design, specification or project management services
• Beauty and aesthetic practitioners for treatment-related claims and advice
• Accountants, IT contractors and marketing agencies (often required by client contracts)
• Health and allied professionals — alongside or instead of general PI, depending on the risk

Regulators and professional bodies sometimes set minimum PI limits. Architects, surveyors, solicitors and many healthcare roles must maintain cover as a condition of practice. Client contracts may also insist on specific limits — commonly £1 million to £5 million, and higher for larger projects.

PI vs public liability — you may need both

A hairdresser could face a PI claim if a colour treatment damages a client’s hair and they sue for the cost of correction and lost earnings, and a PL claim if another customer trips over a trailing cable in the salon. A scaffolder might have PL for a pole falling onto a parked car, and PI if their design calculations were wrong. The two covers complement each other; neither replaces the other.

Claims-made vs claims-occurring

Most UK PI policies are claims-made: the insurer responding is the one in force when the claim is first notified, not necessarily when the incident happened. If you cancel PI or change insurer, you may need run-off cover to protect against claims notified after you stop trading. Always tell your broker when you retire, sell the business or let cover lapse.

Choosing limits and excesses

Under-insuring can leave you personally exposed if a claim exceeds your limit. Match your limit to contractual requirements and the scale of work you undertake. Your policy excess applies per claim on many PI policies. Higher excesses can reduce premium but increase your outlay when claiming.

Arranging cover

We provide PI through Tradesman Insurance 4u, Salon Insurance 4u and MMI 4u depending on your profession. Contact us for guidance, or read our guide on choosing business insurance.