How much professional indemnity insurance do we need?

Professional Indemnity Guide

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.


    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 professional indemnity insurance claims. The time spent to defend yours and the insurer's financial interest can be signifciant.

    The most commonly purchased professional indemnity 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.


    At get indemnity™ we can provide professional indemnity limits from £100,000 to £20 million. Unfortuantely, no one really knows how much professional indemnity you may require until the claim for compensation and legal costs have been added up.

    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.


    This guide is for information purposes and based on sources which we believe are reliable, the general risk management and insurance information is not intended to be taken as advice with respect to any individual circumstance and cannot be relied upon as such.