What is professional indemnity insurance?.jpg

Who needs Professional Indemnity Insurance? Explained 1O1

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Who needs professional indemnity insurance?

Professional indemnity insurance should be considered by persons selling their skills and specialist knowledge based on their experience or qualifications.

Such people are relied upon as being experts in their fields and hold a greater level of knowledge and specialism in their subject matter than the average person.

If you fail to exercise reasonable skill and care, or fail to deliver on the services agreed, there may be rights to compensation. Professional indemnity insurance means financial security from having to pay defence costs and damages.

Why you need professional indemnity insurance?

Professional indemnity insurance can offer protection against negligence, breach of contract, defamation, breach of privacy and intellectual property infringement.

Professionals need to ensure they have sufficient business insurance to guard against claims for financial compensation. Professional indemnity insurance means they can offer their services with the knowledge they have access to legal and financial support.

In an increasingly litigious society, if a client feels you haven’t delivered under the terms of your contract or have been negligent, they are more likely to seek financial compensation through the courts.

Traditional vs non-traditional professional indemnity

Traditional professions include: Accountants; Architects; Engineers; Financial Planners; Solicitors; and Surveyors.

However, over the last 15 years there has been a greater emphasis on non-traditional service providers purchasing professional indemnity.

Non-traditional services include: Advertising; Advisory; Consultancy; Contractor; Design & Build; Financial Services; Inspection Services; Intermediary Services; Technology Services; MarketingMediation; Media; Project Management; Software Development; Specification; Testing; Training; Translation; and Valuations.

It is common practice for counterparties to require professional service providers to purchase minimum levels of professional indemnity within their contracts.

Do we need professional indemnity insurance?

Many businesses do not appreciate the need to purchase professional indemnity insurance, especially if there is not a legal requirement or if offering services is only part of their business.


Professional indemnity underinsurance

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

Professional indemnity insurance should always be considered by any business where advice, professional, or technical services are offered to a client. We’ve produced a useful guide: How does a professional indemnity insurance policy work? 

If you are unsure whether you need professional indemnity insurance, please contact us to discuss your circumstances. Either click our chat icon, complete our online form or give us a call.

Do you have professional indemnity requirements?

How much professional indemnity insurance you require, wiill depend if you operate within a regulated industry or need to hold specific limits to meet your contractual requirements.

We recommend you request multiple professional indemnity limit options to appreciate the difference in cost. Note the amount of professional indemnity you decide to purchase may not be sufficent to protect against the total cost of a claim.

Note the costs to defend an allegation typically amounts to over half the total cost of professional indemnity claims. For further reading we've produce a guide called: How much does professional indemnity insurance cost?

Associations, institutes or regulators professional indemnity minimum requirements:


ACAA Chartered Accountants

Architects Registration Board

Chartered Institute of Tax

CIMA Management Accountants

Financial Conduct Authority

ICAEW Chartered Accountants

Institute of Financial Accountants

Royal Institute of Chartered Surveyors

The Law Society


Below we have produced a simple professional indemnity insurance infographic for small business that explains - What is professional indemnity insurance? Who needs professional indemnity insurance? What is a professional service?


Who needs professional indemnity insurance?



PI Insurance Explained posted by Get Indemnity

This guide is for information purposes and based on sources 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.