How much professional indemnity insurance do I need?

Check the requirements for your business and project. The cover limit is one part of the requirement; the insurance type, services and other conditions also matter.

Check the required limit and contract terms

Have the contract and any insurance schedule ready. Identify:

• the business that must be insured;
• the services and responsibilities involved;
• the insurance type and required cover limit;
• how the limit must apply, such as for each claim or in total;
• where work and legal claims must be covered;
• the proof of insurance requested; and
• any requirement to maintain insurance after the project ends.

Ask the client or organisation setting the requirement to clarify uncertain wording, and the provider to explain how the offer meets it. Warranties are promises made in the contract; do not assume every promise or liability accepted is insured.

Check applicable professional or regulatory conditions

Distinguish legal or regulatory duties from professional-body conditions and client contracts. Check the current rule, who it applies to and the relevant jurisdiction.

For example, the FCA requires certain regulated firms to hold PI. This is not a minimum for every consultant or IT contractor, or confirmation that the comparison service offers cover for that activity.

Is the required minimum enough?

Meeting a required cover limit does not establish that the policy accepts all your services, satisfies every contract term or addresses the losses your work could cause. Check the minimum alongside the work and wording.

Our guide to legally required business insurance explains the different sources of requirements. Clarify unresolved conditions with the relevant parties or an appropriate professional before choosing cover.

Consider how clients use your advice, reports, designs or implementation work. A client’s alleged loss can differ from your fee or the project’s value. The examples below are hypothetical questions to consider, not recommended cover limits or predicted claims.

Advice and client decisions

Example: A client relies on a consultant’s report when deciding how to spend its budget, then alleges that an error caused unnecessary costs.

Check:

• the work agreed;
• how the client used the report;
• the loss alleged; and
• whether the services are insured.

These checks do not assume negligence or a covered claim. Our consultant insurance page covers the wider service questions.

Systems, implementation and connected projects

Example: A client claims that an IT contractor’s implementation error disrupted a business operation.

Explain the responsibilities undertaken and how the client uses the system. Check the services insured and relevant data, cyber and interruption provisions; do not assume every resulting loss is covered. See IT contractor insurance for the work-specific questions.

Current and previous work

Consider past projects as well as the newest contract. Earlier advice or completed work may still lead to a claim. Discuss the relevant services and dates. There is no universal formula based on fees, turnover or contract value that produces a sufficient PI cover limit.

The cover limit, often called the limit of indemnity, is the maximum payable under the relevant policy terms. It is different from the premium you pay. It does not guarantee a payment or cover for every service.

The insurance limit does not itself cap your business’s legal liability. Amounts above the available insurance, and liabilities the policy does not cover, may remain your responsibility.

Comparing cover limits

£500,000, £1 million and £2 million are illustrative cover limits, not recommendations or confirmed available options. Ask which limits are available for your services.

On an otherwise matching basis, a higher amount means a higher stated cover limit. Requirements, services, dates, costs and exclusions still need checking at each amount.

Is £1 million enough?

Check your requirements, the losses your work could cause and how the policy applies. The amount alone does not tell you whether cover is sufficient, and a job title does not determine a suitable limit.

A higher limit does not add cover for excluded work

A higher cover limit does not correct excluded services, the wrong insured business, unsuitable jurisdictions or uninsured contractual promises. It does not automatically protect previous work. Compare what is insured before treating a higher or more expensive offer as suitable.

Check how the cover limit applies across claims and costs. Use these questions to compare the wording behind the amount shown on the quote.

Feature	What to check
Any one claim	Which claims share a limit and what other limits or conditions apply? The label does not mean unlimited annual protection.
Aggregate: total limit across claims	Which claims and costs share the total, and for what period?
Related claims	Which connected allegations are grouped, and which limit and date apply?
Defence costs	Do they count towards the relevant limit or sit outside it? What restrictions apply?
Claimants’ legal costs	How are costs you become liable to pay treated, including relevant limits and conditions?
Insurer approval and claims handling	Which costs need approval, and what consent or control conditions apply?
Sublimits: smaller limits	Which claims or costs have a smaller limit, and is it part of the main cover limit?
Excess	How much must the business pay, and how does it apply to claims, related matters and defence costs?
Reinstatement: restoring available cover, if offered	What triggers it, how much can be restored and what restrictions apply? Do not assume an automatic reset.

If several businesses or people are insured, check whether they share one limit. Do not assume each has a separate allowance.

An excess is a potential claim contribution, not a guaranteed annual bill to add to the premium. Check that your business could afford the amount you may have to pay towards a claim before choosing it.

Read the schedule, wording and endorsements together. Endorsements change the policy terms. Our guide to business insurance limits and excesses explains these mechanics in more detail.

Compare cover limits only after checking that the services, dates and locations match the work you need insured.

Services, businesses and outsourced work

Describe the advice, design, implementation and other services actually undertaken. Confirm the businesses and people insured, and explain work delivered by associates or subcontractors.

A broad consultancy description does not establish acceptance of every specialism, outsourced service or performance commitment. Ask how the offered wording treats the responsibilities in your contracts.

Previous work and notification

PI is commonly arranged on a claims-made basis. When a claim is first made against you matters, alongside reporting requirements and other conditions. The policy held when the work was done will not necessarily respond to a claim made later.

Check whether a retroactive date applies. The wording may use it to restrict cover for earlier acts, errors or omissions. Confirm which previous services are included; the date alone does not establish that all earlier work is covered.

Check known problems and reporting conditions separately. Follow notification requirements promptly, including for circumstances that could lead to a claim. Some policies can respond to later claims arising from circumstances properly notified earlier. Read about claims-made and claims-occurring insurance for the detail.

Before switching, check that the replacement preserves the cover you need for previous work. A new policy does not automatically reproduce earlier protection.

Run-off cover concerns later claims about completed work, subject to its terms. Check whether it is relevant and available before cancelling between projects or stopping work. There is no universal run-off period. Our guide to retroactive dates and run-off cover explains these checks.

Client location and jurisdiction

Check three separate questions: where is the client based, where do you work and where could legal claims be brought? Remote delivery or a higher cover limit does not overcome a territorial restriction.

Ask the provider to confirm the relevant countries and courts. Review business insurance exclusions when checking restrictions affecting your services.

Changing the limit may change the premium. Obtain comparable written offers to establish the actual difference for your business. There is no fixed price increase that applies to every business.

Compare the same services, dates and other terms; a price difference may reflect more than the cover limit. Keep requirements and cover for previous work in view when considering affordability. Our professional indemnity insurance cost guide covers pricing and payment comparisons.

Gather the documents that explain the requirements, work and existing protection. Use this checklist for a discussion with the insurer or intermediary; it does not calculate a suitable cover limit.

Question	Evidence to gather	Policy check
What is required?	Actual contract and applicable professional rules, including relevant versions.	Business, services, amount, basis, duration and jurisdiction.
What work is undertaken?	Services, deliverables and relevant projects.	Accepted activities and responsibilities.
How do clients use your work?	Decisions, systems and projects affected.	Services and cover limits to discuss without treating possible losses as predicted claim amounts.
What previous work matters?	Current and previous policy schedules, including any retroactive dates.	Relevant dates, known circumstances and notification.
Which businesses, people and locations need cover?	Businesses, associates, outsourced services and client locations.	Insured people, responsibilities and jurisdictions.
How does the limit operate?	Wording, schedule and endorsements.	Aggregation, costs, sublimits, excesses and any reinstatement.
Are the offers comparable?	Written offers for the same intended work and period.	Differences in services covered as well as cover limit and premium.

Give accurate details and clarify descriptions that do not fit your services.

Business insurance requires a fair presentation of the risk. This generally means disclosing material information the business knows or ought to know. Or, failing that, provide enough information to alert the insurer that further enquiries are needed. Answering application questions alone may not be enough. Ask the broker or insurer if you are unsure what to disclose.

If a requirement exceeds the options offered, clarify it with the relevant client and provider or intermediary. Do not assume additional insurance above the available limit, or an immediate increase, can be arranged. Our guide to comparing business insurance quotes explains the wider process.

Review it when requirements or responsibilities change, as well as at renewal. Relevant triggers include:

• new clients, contracts or professional requirements;
• new services, design or implementation responsibilities;
• larger projects, different client uses or greater responsibilities;
• overseas projects or outsourced work;
• renewal, switching insurer or proposed cancellation; and
• stopping work when completed projects could still lead to a claim.

Follow the notification requirements and confirm agreed changes, their start date and updated documents. Do not assume an increase applies to an issue you already know about. Check acceptance of each new service. A higher cover limit does not resolve a reporting failure.

Use our guides to business changes to tell your insurer about and business insurance renewal for the wider review.