What Is Professional Indemnity Insurance
Professional Indemnity insurance is relevant if you or your organisation provide advice or professional services. Also known as Professional Liability or Errors & Omissions cover, it can include protection for breaches of copyright, libel, and cyber/data incidents.
This type of insurance covers the costs of any claim brought by a client or service user for financial loss resulting from an error or omission in the advice or service provided. Some policies also extend cover to personal injury caused by your error or omission.
Key Considerations for Professional Indemnity
Contractual Requirements
While you can generally choose the level of cover that suits your risk appetite (commonly £250,000, £500,000, £1M, or £2M), certain contracts or agreements may require specific limits. Examples include charity grant applications, tender processes, or commissioned services. If you are a regulated firm, your regulator may also impose specific limits—for instance, the Solicitors Regulatory Authority typically requires £2,000,000 of cover.
Basis of Cover
Professional Indemnity can provide a limit of indemnity either “in the aggregate” or on an “any one claim” basis. An aggregate limit is the maximum the insurer will cover in a policy period (usually a year). An “any one claim” basis applies the limit to each claim, irrespective of how many claims are made.
Claims Made
Most Professional Indemnity policies operate on a claims made basis, meaning cover is for claims brought during the policy period. By contrast, Public Liability policies are usually on a claims occurring basis, where the insurer at the time of the incident handles the claim. This distinction is important if you change provider or close your organisation, as you may need run-off cover to protect against future claims.
Retroactive Date
Since Professional Indemnity policies are claims made, insurers usually provide cover only for work done after the policy was purchased. They will request a retroactive date, and claims for work done before that date will not be covered. Avoiding gaps in cover is crucial, as retroactive dates reset if coverage lapses.
Talbot Jones Ltd is a family-run Chartered Insurance Broker specialising in Third Sector and Professional risks. Get in touch for free insurance advice, a review, or a quotation.
