How much professional indemnity insurance do we need?

Business Insurance FAQ

Limits of professional indemnity

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How much professional indemnity you decide to purchase can be impact by a number of factors.
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Your contracts, nature and size of clients, and industry standards can all impact your PI limits.
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Discuss your requirements with an insurance broker and we can benchmark you against your peers.

Limits of professional indemnity

tick
How much professional indemnity you decide to purchase can be impact by a number of factors.
tick
Your contracts, nature and size of clients, and industry standards can all impact your PI limits.
tick
Discuss your requirements with an insurance broker and we can benchmark you against your peers.

By Simon Taylor (ACII) - Published: 27 June 2021

 

What limits of professional indemnity insurance should we consider?

Professional indemnity underinsurance remains common and when businesses face disputes they can find themselves having to pay costly legal fees and compensation claims to put their customer back into the same financial position.

Although many companies will seek to limit their liability within any terms and conditions to the size of the contract, or multiple of that contract. This should not act as the determining factor of how much professional indemnity insurance you may need.

It's important to note a court of law may take a different view and award damages over and above what you have agreed in your contracts because they are seeking to put the claimaint back into the same financial position or award punitive damages. Read how to get a professional indemnity insurance quote from the wholesale market.


    Other considerations when determining how much professional indemnity cover to purchase?

    It is worth considering that legal defense costs are on average over half the total cost of the majority of insurance claims. The time spent to defend yours and the insurer's financial interest can be signifciant.

    The most commonly purchased professional indemnity insurance amount is £1 million for small businesses because it typically respresents value for money. We recommend you request a couple of different options to appreciate the difference in cost.

    You may also have prospective clients that require evidence of how much professional indemnity insurance you purchase. Depending upon the size of the clients you are targeting, may impact your decision making on how much cover you require.


    Unfortuantely, no one really knows how much professional indemnity you may require until the claim for compensation and legal costs have been added up.

    At get indemnity™ we can provide professional indemnity insurance limits from £100,000 to £20 million. If further amounts of PI insurance are required we can approach our wholesale partners.

    Please note your industry regulator or professional membership may require your business to purchase a specific level of professional indemnity cover. Please seek advice from your specialist insurance broker to discuss your needs.


    How do professional indemnity insurance limits apply?

    The amount of cover you purchase, otherwise know as the limit will operate on either:

    An aggregate basis: which means the policy has a maximum amount payable for the entire policy period, no matter how many claims are made (the limit will be eroded by the claims made); or

    Each and every claim: which means the cover provided under the policy applies to each and every claim made, or a series of claims arising from any single event (the limit will be reinstated after each claim made).

    Please note your industry regulator may require your business to purchase a specific type of policy limit to meet their specific criteria. To discuss your specific business requirements please arrange a call back.