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Insurance that can cover you if a client makes a claim against your business
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Last updated
March 11th, 2024

What is professional indemnity insurance?

Professional indemnity insurance is designed to protect businesses that offer services to others. It’s important given the service you provide may well help other businesses to make important decisions. If a client is unhappy with the service they’ve paid for, professional indemnity insurance should protect you against a claim for damages. For example, a client may claim they’ve lost money as a result of the advice you’ve given them.

Alternatively, you could be sued for lost documents or data or even for defamation. The range of companies that are potentially at risk – without professional indemnity insurance – is vast. 

This cover is not a legal requirement for all businesses. But it may be required if you’re part of a trade body or subject to industry regulation, and some clients will only work with firms that have it. The right policy can cover expensive claims that could otherwise cost your business thousands in legal fees.

Professional indemnity insurance can be useful for services that include design work, accountancy and financial advice or even marketing and surveys. 

Claims can still occur if you’ve provided the service for free.”

How does it work?

Professional indemnity insurance works best when the policy is tailored to your business needs, so you have an assurance that you’ll be covered should the worst happen. 

Once you’re happy that the policy covers your business, you’ll need to check the excess to see how much it’ll cost you if you’re sued. This type of insurance is usually centred around the claim, as it will only cover you for cases brought against you during your policy term.


In 2021, UK professional indemnity insurance market size was valued at[1]
£2.9billion

Do you need professional indemnity insurance?

Professional indemnity insurance is not a legal requirement. But that doesn’t mean you don’t need it. This cover is highly recommended if your business offers a professional service to clients who could sue you should something go wrong. 

If you offer advice to clients that might result in them losing money, you could be sued. Similarly, if you mishandle their private and confidential details, resulting in sensitive information being revealed, you could expect a court case. 

Likewise, if you damage a client’s property or their reputation through your actions or correspondence, you may face a legal claim. All this can prove very expensive if you don’t have adequate professional indemnity cover in place.

Here are some, but certainly not all, types of businesses that might need to secure this type of insurance

  • Financial advisers

  • Architects 

  • Accountants 

  • Advertising 

  • Journalism

  • Graphic design

  • Solicitors

How to choose the right professional indemnity insurance for you

If you are thinking about getting public indemnity insurance then consider the following questions before making your decision.

What does the policy cover?

Is the policy tailored to your business needs and does it cover everything you need it to? If there are gaps in the policy it’s always worth taking the time to ask the policy provider if your needs can be met.

How long can you get cover for?

Many insurance policies run annually. But if you only need insurance for a few weeks or months, you might want to look for an insurer that has monthly payments and flexible terms.

How much does the cover cost?

Like all insurance policies, the best insurance mightn’t be the cheapest. However, it’s still worthwhile comparing a range of quotes. This way you’ll increase your chance of finding the best price for a policy that ticks all the boxes in terms of your business needs.

How does the provider handle claims?

If you ever need to make a claim, you’ll want it to be sorted as efficiently as possible. Check how the insurer handles the claims process. You may find that your claim gets processed quicker if the insurer handles claims in-house rather than outsourcing the process to a third party.

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We qualify, quantify and offer insurance using data, analysis and technology, and we serve a wide range of business types — from dog walkers and dieticians, to landlords and locksmiths. Enro Ltd t/a Superscript is authorised and regulated by the Financial Conduct Authority.

Why Superscript?

We make it quick and easy to find, buy and manage your business insurance.

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Customisable cover for 1000s of business types
Superscript will help you find the different types of cover that are right for your business.
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Amend your cover with no admin fees, to address your evolving needs as your business grows.
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Simple claims process
Our customer portal allows you to enter the details we need to get your claim processed.

What does professional indemnity insurance cover?

Covered

Breach of contract
Professional negligence
Plagiarism
Defamation
Design errors or loss of documents
Intellectual property and trademark disputes

Not covered

Claims that the business owner knew about before purchasing the policy
Deliberate acts
Claims as a result of dishonest, fraudulent, malicious or illegal acts

How much does professional indemnity insurance cost?

The cost of this insurance will vary, depending on the size of your business and the type of business you run, among other factors. The insurance quote will also take into account your annual turnover, your claims history and the limit of indemnity you need. You’ll also need to decide how much excess you are willing to pay as this will contribute to the final cost. 

As with most policies, price shouldn’t be your main priority. Cheap insurance could end up costing you more if it doesn’t provide the cover you need. To get the best deal, look for insurers that allow you to tailor your policy to your needs so you're not left over - or under-insured.


BusinessMonthly premiums from*Monthly premiums to*
Software and IT services£9.08£65.42
Graphic designers£9.08£17.51
Photographers and videographers£7.71£20.34
Marketing, advertising and communications£9.08£46.67
Management consultants£9.08£23.11
Recruitment consultants£11.25£71.25

*Superscript: 10% of Superscript customers paid this much, or less, between October and December 2023.
**Superscript: 90% of Superscript customers paid this much between October and December 2023.

These prices should only be used as a guide. When you get a quote, it will be tailored to your unique circumstances and risk profile – so you may be quoted a price that’s a bit higher or lower.

And as with most covers, price shouldn’t be your only priority. Cheaper insurance could end up costing you more if it doesn’t provide the cover you need. To get the best deal, look for insurers that allow you to tailor your policy to your needs so you're not left over- or under-insured.


What’s the risk of not having it?

For some industries, it’s a requirement to have professional indemnity insurance. 

Even where it’s not a legal requirement, the decision to take out professional indemnity cover could make a lot of sense. If you decide not to have it and someone makes a claim against you then you could face hefty legal fees, and your business would become exposed.

Professional indemnity insurance plays an important role in risk management for businesses. For example, it can minimise any financial repercussions from allegations of negligence or errors, while safeguarding reputations and sustaining long-term success.

FAQs

What’s the difference between professional indemnity insurance and public liability insurance?

Professional indemnity insurance covers you against claims that you provided negligent advice or services that lead to financial loss or damage for your client. Public liability insurance covers you if members of the public are injured or their property is damaged following contact with your business. This insurance covers you whether you’re carrying out work for them or not.

What happens to work completed before I take out the cover?

You’re typically only covered for claims that arise after you get cover. If you’ve been running your business without professional indemnity insurance, you may want to ask your insurer whether it offers retroactive cover.

What is retroactive date in an indemnity insurance policy?

The retroactive date is the day stated in your policy from which you’ve held uninterrupted PI, even if you’ve switched insurer during this time. Any work you carried out before this date won’t be covered.

It’s sometimes possible to add a retroactive date to a policy that’s earlier than the cover start date. This means  some or all work you completed from this date would be covered, even if it was before you took the policy out. 

Will I get a certificate of insurance when I take out cover?

Many insurers will send a certificate of insurance by email and by post. You can then forward your electronic copy to potential clients as proof of insurance.


Should I get professional indemnity insurance if I’m self-employed?

Although professional indemnity insurance isn’t a legal requirement, it’s well worth considering if through your work you offer advice or services. If negligent advice results in your clients suffering financial loss, it could save you from the cost of defending a legal claim. As a self-employed business owner, you may also find some client companies will only work with you if you have this cover. 

Do I have to pay an excess if I claim?

You’ll typically need to pay an excess to claim on a professional indemnity policy. The amount you’ll need to pay can vary depending on your premiums and the nature of your claim.


Is indemnity insurance a taxable benefit?

Yes, as it’s an ‘allowable expense’ you can deduct it from your profit before you pay tax on it.

Can I take out a short-term professional indemnity insurance policy?

Yes, you can – you might want to take it out for the duration of a specific contract, for example. However, this is risky as you won’t be covered if a claim is made against you after the contract ends.

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About the author

Lucinda O'Brien
Lucinda O'Brien has spent the past 10 years writing and editing content for regional and national titles. She applies her industry knowledge to ensure readers can make confident financial decisions.

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References

1. GlobalData: The UK professional indemnity insurance (PII) market research report