QUICK ANSWER
What is professional indemnity insurance?
Professional indemnity insurance can respond to insured allegations that professional services, advice, design or decisions caused a client financial loss. Relevant information commonly includes services, turnover, contracts, jurisdictions, previous claims or circumstances and the controls used to reduce errors and disputes.
AT A GLANCE
How the protection works
The proposal should explain services, decision-making, contracts, revenue, jurisdictions, data, controls and the potential financial consequences of an error or event.
Professional Indemnity is not one universal contract. Eligibility, sections, limits and wording vary by insurer and must be matched to the individual risk.
FINANCIAL & PROFESSIONAL
What may be covered
- Defence costs, damages or direct loss for insured allegations or events within the selected section.
- Incident response, investigation, recovery or professional support where the wording provides it.
- Business interruption, regulatory, crime or management extensions only when expressly arranged.
Cover applies only as stated in the quotation, schedule and full policy wording.
BOUNDARIES
Common exclusions and limitations
- Known matters, prior circumstances, deliberate or dishonest conduct and uninsurable penalties.
- Services, territories, contracts or events outside the insured definitions.
- Cyber, professional, crime or management exposures where the required section has not been selected.
This is not a complete list. The actual wording, endorsements, excesses and schedule determine the protection.
CLAIMS IN PRACTICE
How a claim might arise
01. A client alleges that an error, omission or decision caused financial loss.
02. A digital or operational incident disrupts services and requires specialist response.
03. Directors, employees or the organisation face an investigation or civil allegation.
These examples are illustrative only and do not confirm that a particular claim would be covered.
PROPOSAL INFORMATION
What information should be prepared for a professional indemnity proposal?
Professional indemnity insurers commonly need a clear description of the services provided, annual turnover, largest contracts, customer types, territorial exposure, contractual responsibilities, previous claims or circumstances, and the controls used to reduce the risk of errors or disputes.
The significance of each factor depends on the profession and the insurer. A consultancy, architect, accountant, technology provider and recruitment agency can all require materially different proposal information even though each may purchase professional indemnity insurance.
For a broader preparation framework, see the DIBNI Commercial Insurance Proposal Guide.
CHOOSING COVER
Questions worth resolving
- Are services, contracts, territories and revenue fully described?
- Do limits and retroactive dates reflect the scale and history of the exposure?
- Which controls, approvals, backups and incident procedures can be evidenced?
CONNECTED RISKS
Related protection to consider
- Property and business interruption where physical damage could stop operations.
- Public, employers’ or product liability for injury and property-damage exposures.
- Cyber, professional indemnity or management liability where data, advice or governance creates additional risk.
- Motor, marine, travel or other specialist protection where the activity requires it.
QUESTIONS
Frequently asked questions
Are services, contracts, territories and revenue fully described?
The answer depends on the facts presented to the insurer and the terms offered. Accurate, current information is essential.
Do limits and retroactive dates reflect the scale and history of the exposure?
Limits and conditions should be tested against realistic loss scenarios, contracts and the time or cost of recovery.
Which controls, approvals, backups and incident procedures can be evidenced?
Documented controls help an insurance professional explain the risk and may affect available terms.