1. What does Professional Indemnity insurance actually cover?
It protects you if a client claims you made a professional mistake that caused them a financial loss.
The policy pays for compensation and legal defence costs.
2. When does the policy pay for a claim?
PI insurance only covers claims that are:
- Made against you during the policy period, and
- Reported to the insurer during the same period.
Late notification may result in the claim not being covered.
3. What is a Retroactive Date and why is it important?
The Retroactive Date shows how far back your cover applies.
Any work done before this date is not covered.
If you want protection for older work, you must request an earlier Retroactive Date.
4. What kinds of mistakes are usually covered?
Common professional risks covered include:
- Breach of confidentiality
- Errors in advice or service
- Defamation (accidental harm to someone’s reputation)
- Misuse of intellectual property
- Lost or damaged documents
- Unintentional breach of consumer protection laws
These form the core of standard PI protection.
5. Are legal defence costs included?
Yes. Legal defence costs are included, but they are paid from your overall limit, meaning they reduce the amount available for compensation.
Choosing the right limit is essential.
6. What extra benefits come automatically?
Most policies include helpful extras such as:
- Small payments when you must attend court
- Cover for official investigations
- Costs to replace lost or damaged documents
- Protection if someone alleges intentional misconduct (until proven otherwise)
7. Can I add extra cover if needed?
Yes. Optional add-ons may include:
- Pure financial loss cover (when no physical damage or injury occurs)
- Rectification costs, helping you fix a mistake before it becomes a full claim
These are especially useful for high-risk professions.
8. What is not covered?
Typical exclusions include:
- Intentional wrongdoing or fraud
- Fines and penalties
- Employment-related disputes
- Product defects or business debts
- Claims from the USA or Canada
- Work before the Retroactive Date
- Issues known before the policy started
These exclusions are standard in most PI policies.
9. How does the excess (deductible) work?
You pay the first part of every claim—this is the excess.
If several claims relate to the same issue, they are treated as one claim, with one excess.
10. What must I do if I think a claim might happen?
Notify the insurer immediately, even if it’s only a potential issue.
Also:
- Do not admit liability
- Do not negotiate with the client without insurer approval
- Provide all requested information promptly
Early notification helps protect your cover and speeds up the process.