Pillar Guide · Updated July 2026
Professional Indemnity Insurance: A Complete UK Guide for 2026/27
Professional indemnity insurance protects self-employed people and businesses that give advice or provide a professional service against claims of negligence, error or omission. This guide explains what it covers, who typically needs it, how much cover to buy, and important features such as claims-made cover and run-off cover.
What Professional Indemnity Insurance Covers
Professional indemnity insurance covers the legal costs and any compensation a professional or business has to pay if a client claims they suffered a financial loss because of negligent advice, a mistake, or a failure to deliver a service to the standard promised, even if the claim ultimately turns out to be unfounded. It typically also covers the cost of defending a claim, which can itself be substantial even where no compensation is ultimately awarded.
Who Typically Needs It
Anyone who gives advice, designs something, or provides a professional service that a client relies on can benefit from cover, including consultants, accountants, solicitors, architects, engineers, IT contractors, marketing agencies, and financial advisers. Freelancers and contractors are often required to hold it as a condition of winning work from larger clients, even where it is not a legal requirement for their profession.
When It Is Mandatory
Certain regulated professions are legally required to hold a minimum level of professional indemnity insurance as a condition of practising, including solicitors, financial advisers regulated by the FCA, architects registered with the Architects Registration Board, and some healthcare professionals, with minimum cover levels and specific policy conditions set by their regulator or professional body.
How Much Cover to Choose
The right level of cover depends on the size and value of contracts a business typically undertakes, any minimum level required by a regulator or professional body, and, very commonly, minimum cover levels specified in client contracts, which can require anywhere from £250,000 to several million pounds of cover depending on the size of client and project involved.
Claims-Made vs Claims-Occurring Cover
Most professional indemnity policies are written on a 'claims-made' basis, meaning the policy in force at the time a claim is actually made responds to it, regardless of when the work that caused the claim was actually carried out, rather than the policy in force when the mistake happened. This makes continuous, unbroken cover important, since a gap in cover can leave a business unprotected against claims relating to work done during that gap, even if a new policy is later taken out.
Run-Off Cover
Because claims-made policies only respond to claims made while cover is active, closing a business, retiring, or stopping trading does not remove the risk of a claim relating to past work arising later. Run-off cover is a policy (or extension) specifically bought to cover this ongoing risk after a business has stopped trading, and is often required for a set minimum number of years by professional regulators.
Common Exclusions
Standard exclusions often include deliberate or dishonest acts, fines and penalties imposed by a regulator, liability assumed under a contract that goes beyond what the professional would otherwise owe at law, and, unless specifically covered, cyber-related losses, which usually need separate cyber insurance. Policies also typically set an excess the policyholder must pay towards each claim.
What Affects the Cost
Premiums are influenced by the profession and the specific services provided, annual turnover or fee income, the level of cover chosen, claims history, and the size of the excess selected, with higher-risk professions such as financial advice or construction design typically attracting higher premiums than lower-risk consultancy work.