Professional Indemnity Insurance 

Professional indemnity insurance is designed to protect "professionals" in respect of their legal liability to third parties whom have suffered financial loss or injury as a result of their negligence. The cover protects the policyholder in respect of what is known as the professional risks, for instance the provision of advice, design and specification for a fee rather than the supply of a physical product or service. 

How does liability arise?

From either a breach of contract or tort, generally most claims arise under breach of contract, perhaps specifically, but often under an implied duty on the insured to exercise reasonable care and skill in the execution of the contract.

The test of what constitutes reasonable care is often a subjective one based upon the general level of competence within a profession and and prevailing conditions at the time of the alleged breach of duty.

What indemnity levels are available?

Many insurers will issue policies with a limits from £100,000 upwards, but the actual level of cover is often driven by contractual conditions or requirements of trade and professional bodies.

Most professional indemnity insurance policies operate on a claims made basis - essentially any claim is made upon the policy in force at the time of the claim notification, rather than the claims made basis under most general insurance policies where the claim is made upon the policy in force at the time the claim actually occurred. It is for this reason that in professional indemnity insurance retroactive dates on polices and run off cover are important considerations.