Professional indemnity
Professional Indemnity Insurance protects professionals who provide advice, design, or consultancy services against claims of negligence, errors, or omissions in their work.
It covers legal defence costs and any compensation awarded if a client suffers financial loss due to the professional’s mistake or breach of duty. Commonly used by architects, engineers, and consultants, this cover is essential where expert knowledge or judgment is relied upon.
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What is covered?
• Claims arising from negligent advice, design or a breach of professional duty
• Covers legal costs and damages if a client suffers financial loss due to your error or omission.
What is NOT covered?
• No physical construction is covered.
• Known Claims or Circumstances
– Any claim or issue known before the policy started is excluded.
• Deliberate Acts or Fraud
– Intentional wrongdoing, dishonesty, or criminal acts by the insured or employees.
Who Needs This Cover
Qualified professionals and specialists involved in construction, design, and technical services, including:
Professional Roles: Architects, Engineers, Project Managers, Construction Managers, and Specialist Consultants or Inspectors appointed by or working under a qualified discipline.
Specialist Trades & Services: Landscaping, Security, Burglar Alarms, Electrical, Plumbing, Cladding, Glazing, Specialist Finishes, Communications Tech, Lifts/Escalators, Fire Protection, Flooring, Structural Steel, Formwork, Roofing, Painting, Refrigeration, HVAC, Solar, Water & Sewerage, Road Marking, Bituminous Surfacing, Scaffolding, Precast Concrete, and Turnkey Interior Design.
Type Of Policy
Claims Made Policy
Fixing design mistakes can cost big money, so it’s important to understand how your policy works.
A “Claims Made Policy” simply means that the claim must be reported while your policy is active – between the start and end dates on your schedule.
Here’s what counts as a claim:
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Damage: Physical loss of or damage to property
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Injury: Death, injury, illness, or disease suffered by someone
So, even if the problem happened earlier, the insurer will only cover it if the claim is made during the time your policy is running.
In short:
If your cover has expired and you try to claim, you’re out of luck. The claim must be reported while the policy is live.
Can you claim for something that happened before the start date of a Claims Made Policy?
No, not usually.
With a Claims Made Policy, the insurer will only consider a claim if:
- The claim is reported while the policy is active, and
- The event (damage or injury) happened on or after the policy’s start date
If the problem happened before the cover began, you normally can’t claim.
There is one exception:
Some policies include a Retroactive Date. If your claim relates to something that happened after the retroactive date, it could still be covered — even if it happened before the current policy period.
Bottom line:
Check your schedule for a retroactive date. If there isn’t one, any event that happened before the start date won’t be covered.
Frequently Asked Questions
Does PI Cover physical damage or injury?
No, PI covers financial loss caused by professional negligence. Physical damage or injury is typically covered under Public Liability or Contractors All Risk insurance, unless directly caused by a design flaw.
Is PI insurance mandatory?
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Design miscalculations causing financial loss
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Incorrect specifications on a design
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Inadequate advice
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Breach of statutory duty or professional regulations
What is "retroactive cover"
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Retroactive cover allows your current PI policy to cover work done before the policy start date—usually back to a specific “retroactive date.” This is crucial for continuous protection across projects.
Does PI cover faulty workmanship?
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No – PI does not cover poor physical workmanship. It only covers professional errors in advice, design, or documentation that cause financial loss. Faulty work is covered under other policies, like Contractors All Risk.
Can I be held liable for work I have subcontracted out?
Yes, you can be held liable for your subcontractor’s work, as your client has no contract with them—only with you. Your PI policy may cover this if it includes a subcontractors extension, but it won’t cover the subcontractor directly. They’ll need their own PI cover, especially if you claim against them for damages.
