Professional indemnity claim examples for consultants and IT contractors

Agreed work: A consultant prepares a resource-planning report using specified inputs.

Allegation: The client says an input was wrong and the resulting recommendation led it to pay for capacity it did not need.

Alleged loss: The client claims the decision caused extra costs.

Facts to establish: Who supplied the input? Who checked it? What assumptions and report qualifications were agreed? How did the client use the recommendation? An incorrect input does not itself prove it caused every claimed cost.

Records that may help: Agreed project terms, input sources, report versions, correspondence and relevant decision or cost records requested through appropriate channels.

Policy and timing checks: The business and consultancy services insured, applicable liability terms and exclusions, and work, claim and reporting dates. Identify the actual service and alleged financial consequence before assuming cover.

Agreed work: A process consultant prepares a handover plan against an agreed set of requirements.

Allegation: The client says a required item was left out.

Alleged loss: The client claims extra work was needed to put the plan right, alongside additional supplier charges.

Facts to establish: Was the item part of the work agreed in the contract or instructions? Check later changes, who supplied information and other reasons for the costs. Client approval alone does not settle responsibility.

Records that may help: Contract, requirements log, change correspondence, dated plan versions, approvals and relevant supplier records.

Policy and timing checks: Services insured, contractual/performance provisions and terms about putting work right. An omission can raise a professional allegation; not every contract failure is negligence or insured liability.

Agreed work: An IT contractor configures an integration between systems.

Allegation: The client says orders failed to synchronise because of a configuration error.

Alleged loss: Additional manual-processing costs.

Facts to establish: The specification, third-party dependencies, access rights, changes, tests and release responsibilities. The contractor may not control every component, and it still needs to be established what caused the problem and costs.

Records that may help: Scope and specification, relevant change or access logs, test results, release approvals, correspondence and records supporting the alleged processing costs.

Policy and timing checks: Services insured, systems/data restrictions and contractual terms. Software involvement does not by itself establish a cyber claim; see the distinctions below.

Separate costs of correcting your work from other alleged client losses. Does any relevant provision for putting work right (rectification) or action to limit losses (mitigation) apply? Do not assume all corrective work qualifies as insured loss-reduction action.

Agreed work: A testing contractor agrees to complete defined checks before a software release.

Allegation: The client says some agreed tests were not performed.

Alleged loss: The client attributes disruption and the cost of another contractor putting work right to the missed checks.

Facts to establish: The test scope, acceptance criteria, results, dependencies and who authorised release. Responsibility for testing is not automatically a guarantee of software performance.

Records that may help: Contract, test plan, versioned results, issue and change logs, release records and relevant cost evidence.

Policy and timing checks: Services insured, performance promises, terms about putting work right and required approval. Correcting work and other alleged losses may raise different questions; neither has a universal outcome.

Agreed work: A consultant or contractor agrees project milestones dependent on specified client inputs.

Allegation: After an overrun, the client says the business caused the delay.

Alleged loss: Financial costs attributed to late completion.

Facts to establish: Records show late inputs and repeated scope changes, but those facts alone do not prove or disprove the allegation. Check responsibilities, dates and how each party’s decisions affected the delay.

Records that may help: Agreed milestones, input deadlines and receipt dates, changes, communications and acceptance records.

Policy and timing checks: The actual claim/circumstance definition, notification and investigation or defence provisions. Disputing the allegation does not remove reporting checks. The policy does not guarantee a funded or successful defence.

Your own equipment

A consultant breaking their own laptop raises a question about damage to their own equipment, rather than a client allegation about professional services. Check any relevant business equipment insurance terms. Do not assume it includes every repair, data loss or lost income.

Injury or physical property damage

A visitor tripping over a cable or physical damage to a client’s device raises injury or property questions. The public liability examples explore those situations.

Actual wording matters: do not assume professional indemnity can never include relevant injury or property-damage claims, or that every financial consequence belongs to professional indemnity simply because money is claimed.

Security incidents and data loss

Separate your own response or recovery costs from a client’s allegation about professional work. Professional indemnity and cyber terms may address different aspects, overlap or contain exclusions. Data involvement alone does not establish professional indemnity cover, and software involvement alone does not establish a cyber claim.

Record these separate dates; they need not follow a fixed order:

• when the work was performed;
• when the concern or complaint became known;
• when a claim was made;
• when the insurer was notified.

Check claim/circumstance definitions, relevant policy periods, reporting deadlines and restrictions on earlier work or retroactive dates. Policies do not all use identical made-and-notified terms.

A routine project query is not automatically a policy-defined claim or circumstance. Check what is known against the wording rather than waiting for a label, formal demand, loss stated as an amount or admission of fault.

Some policies can treat a later claim arising from a properly reported circumstance as made in the earlier policy period. Check the requirements and connection between them. Reporting or an acknowledgement alone does not establish that these requirements or other cover terms are satisfied.

Use the claims-made and claims-occurring guide for timing and the retroactive dates and run-off guide for previous work or stopping work. Renewal or new insurance does not automatically protect a known matter.

Check the actual liability basis: negligence is not the only possible basis of civil liability under every professional indemnity policy.

Check	What to establish
Insured business and services	Correct business and consultancy/IT work insured, including responsibilities taken on.
Cover and definitions	Relevant claim, circumstance, civil-liability and professional-services terms.
Restrictions and amendments	Exclusions, exceptions, contractual/performance provisions and endorsements.
Previous work and timing	Relevant policy period, dates and rules about known claims or problems.
Limits and excess	Compensation limit basis, shared/smaller limits and the business’s contribution where required (the excess).
Defence and loss-reduction action	What costs or action are included, and what approval or conditions apply.
Reporting	Required recipient, method, timing and information.

Read the applicable wording/version and schedule alongside endorsements, documents changing the terms. Ask the provider which terms apply if documents conflict. For missing summary details, record “not stated; ask”, obtain a written explanation and identify any revised documents needed.

Check legal defence costs and loss-reduction costs separately from compensation, including their limits, approval requirements and any excess. Do not assume defence costs are unlimited or voluntary corrective spending will be reimbursed. The limits and excesses guide explains financial checks in more detail.

1. Check the required contact and deadlines promptly. Use the specified insurer, broker or claims contact. Do not wait for a complete pack or a new policy.
2. Report honestly. Explain known facts, allegations and uncertainty. Your current insurer is not necessarily responsible for the relevant period.
3. Retain relevant records. Use the authorised secure channel and share only necessary client, system or personal information.
4. Check approval before commitments. Before admitting liability, agreeing a settlement, making a payment or committing to corrective spending, ask the claims contact what approval is needed. A promise to redo work does not guarantee reimbursement.
5. Forward formal correspondence promptly. Obtain appropriate professional help with response deadlines; insurer notification may not complete every required action.

Truthful reporting and necessary urgent safety or security action should not be delayed for routine approval. This does not establish reimbursement of every remedial cost.

A new quote or enquiry to Clearcut does not notify the insurer about an existing problem or establish protection for it. The claims guide explains reporting; the records guide covers supporting material.

For future cover questions, use the professional indemnity guide.