Business Insurance

What is professional indemnity insurance?

Professional indemnity insurance (PI) is a type of business insurance that covers you for costs you might face if your work, service, or advice causes a client to suffer a loss – either financial or reputational.


What is professional indemnity insurance?

Professional indemnity insurance is there to protect your business if a client alleges that there are faults in your work. Nobody expects to make mistakes, but they still happen, and they can cost your clients money. Professional indemnity insurance can cover negligence, breach of confidential information or data, and poor advice which results in a financial loss for your client.


Why should I get indemnity insurance?

Some regulatory bodies require businesses to have professional indemnity insurance, but anyone providing professional services or handling client data and intellectual property should have it too. Mistakes happen, breaches occur, and even if it’s not your fault, you could still be challenged. If an employee gets it wrong, or even if you feel there’s no error on your part, you may still have to defend yourself.


How much professional indemnity cover will I need?

This will depend on the severity of the financial impact of a mistake in your line of work; it should be enough to cover the cost of defending or settling any claims you might face. To calculate this, check your contracts and the value of your projects and talk with peers or a professional body.

Professional indemnity insurance pays your legal costs, as well as any compensation payments that may be due, if your client takes legal action against you for a mistake you have made when providing professional services, advice or designs to your client.

Without professional indemnity cover in place, you’d have to defend any allegations of mistakes out of your own finances – which is why it’s typically regarded as essential business insurance.

These mistakes can cost clients time and money. They may choose to take legal action against you to recover their costs. Professional indemnity insurance pays the legal costs in defending you, as well as any compensation payments that may be due to your client as a result of your mistake.

It’s worth bearing in mind that even if you’ve done nothing wrong and a client makes an unfounded or spurious claim against you, it can cost significant sums of money to defend yourself. Professional indemnity insurance can cover you against such scenarios.


  • What’s covered by professional indemnity insurance?
  • This covers your legal costs and expenses in defending a claim. Including any compensation or costs that may subsequently be awarded, following:
  • Professional negligence – such as making a mistake in a piece of work for a client or giving them poor advice
  • Unintentional breach of confidentiality – such as sharing sensitive client information without permission
  • Unintentional breach of copyright – such as using an image on your website without permission
  • Defamation and libel – such as making false comments about a competitor or client that damage their reputation
  • Loss of documents or data
  • Loss of money or goods (for which you are responsible)


Get in touch to get advice for your business about the best insurance and cover.

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