Indemnity insurance for professionals

Professional indemnity insurance covers the expense of paying clients for loss or harm caused by a business’s or an individual’s negligent services or advice.

Do I need it?

If you provide your expertise, skills, or advice as part of your career, whether as a self-employed person or for a corporation, you should think about getting professional indemnity insurance.

Some professions are required by their professional organizations or regulators to obtain professional indemnity insurance, such as:

  • Solicitors
  • Accountants
  • Architects
  • Surveyors
  • Financial Advisors

Many other firms opt to get professional indemnity insurance to protect themselves against claims, such as:

  • advertising firms
  • consultancies
  • design firms
  • public relations firms

What it includes 

Professional indemnity insurance protects you against claims for loss or damage made by clients or other parties as a consequence of negligent services or advice you supplied.  

Compensation claims might be launched against you even if you provided a free service or advise. 

Coverage terms and conditions

Professional indemnity insurance is often provided on a claims-made basis. This implies that your insurer will only cover you for claims made against you within the policy’s term. You will not be protected if a claim is filed against you after your policy has expired, even though the occurrence happened while your policy was in effect.

For example, if an event happened in 2011 when you were covered by professional indemnity insurance, but the client files a claim against you in 2012 – after your coverage has ended – your insurer will not cover you for that claim.  

If you are retiring or changing professions and need to terminate your professional indemnity insurance, you might consider acquiring a run-off policy. This protects you against new claims made against you after your professional indemnity insurance has expired. 

New claims may be launched against you for up to six years after an alleged negligent conduct, therefore your run-off insurance should protect you throughout this time.

Run-off insurance can protect you against new claims for occurrences that happened while you were with your prior insurer if you are moving insurers. Alternatively, your new insurer may agree to cover you for earlier event claims.

Check to see whether your new insurer covers you for earlier incident claims, or inquire about purchasing run-off insurance. 

Purchasing professional liability insurance

Professional indemnity insurance may be purchased directly from an insurer or via a specialized broker affiliated with the British Insurance Brokers’ Association (BIBA). Your employment will determine the quantity of coverage you need and the cost of your premium.

Some professional organizations and regulators require that their members be insured for a certain sum. Solicitors, for example, must obtain professional indemnity insurance worth between £2 million and £3 million for every claim brought against them.

If you are not a member of a professional group, you might ask your customers what level of coverage they anticipate from you.