Phone icon
Menu icon
Professional insurance
with a personal touch
We're open as usual
0345 222 5391
Mon-Fri, 9am-5pm, local rate & mobile friendly

How to work out your professional indemnity insurance level of cover


Too much is always better then too little when working out your professional indemnity insurance level of cover.

Of all the questions we're asked, ‘how much professional indemnity insurance should I have?’ is the biggest head-scratcher.

Why? Because rather inconveniently, there isn’t a one-size-fits-all way to work out your professional indemnity insurance level of cover definitively.

Even more inconveniently, getting the answer wrong – and we don’t want to be melodramatic here – could spell disaster.

If that sounds less than helpful it’s really not meant to be: being underinsured could be as devastating as not being insured at all.

And if we assume that the rule ‘if it can go wrong, it will’ always applies, it makes sense to protect your business with as much cover as you can get.

What's the minimum professional indemnity insurance level of cover I need?

If we were really pushed for a figure, we'd say don’t go for less than £250,000. Ideally, choose £1m if possible.

But (and it’s a big but) times are hard and budget restraints often mean a compromise. So where do you start?

When evaluating what level of cover you need, bear these three things in mind:

  1. What you’re doing.
  2. Who you’re doing it for.
  3. How much it’s worth.

Try not to think of your insurance as set in stone either. Your level of cover can vary from contract to contract as each job changes.

Caveat: be wary of reducing your level of cover – it changes the policy retrospectively too. You should always think about the work you’ve done and consider whether your insurance is still enough to pick up claims arising from past contracts.

Most claims come from work you’ve already completed and they’ll be subject to the level of cover you have now; not what you had when the work was done.

So, let’s look at those three points in more detail.

Key factors for working out your professional indemnity insurance level of cover

What you’re doing

What exactly is your client asking you to do? What could go wrong? What could you be liable for and what would it cost to put right?

The level of cover you choose should be enough to meet the cost of all losses your client faces if you make a mistake. Insurers always look at worst-case scenario when underwriting a policy and you should do the same.

Who you’re doing it for

We’re generalising here but, as a rule, bigger clients have more money.

As the little guy, you’re an easy target for their team of ruthless solicitors. If something does go wrong, big companies tend to sue first and ask questions later. In our experience, they’ll try to pin as much as they can on you and won’t be fazed by the prospect of opening their wallet to do so.

So make sure your level of cover is enough to fend off expensive-looking claims from expensive-looking solicitors.

How much it’s worth

Contrary to popular belief, you can be sued for any loss your client (or their solicitor) thinks is your fault. Limiting your liability by contract makes little difference. If a court deems you’re liable for more, you’ll have to pay it.

If your work is part of a larger project and your client alleges that your mistake has delayed or disrupted that too, they’ll sue you for their total loss. It’s worth bearing in mind that many projects, particularly those involving HR, IT or construction, can cost £millions.

So there we go. Choosing your professional indemnity insurance level of cover isn't an exact science but we hope we've helped a little.

If you’re still not sure what's right for you, we recommend talking to a specialist before you buy. We’re here to help if you need us - just call 0345 333 5391.

Or, if you’re already clear about what you need, getting your quote is the easy bit. Click here and away you go.

Image used under license from Shutterstock.

If you liked this, you might like thesethis...

Are you covered when you're working abroad?
In the same way countries have borders, insurance policies have geographical limits. Here's how to avoid having a claim refused because you're off-limits.
Do photographers need insurance?
Our snappy guide to photographers' insurance explains what insurance photographers need and why, from covering your kit to working on location.
How to keep clients happy
Disgruntled clients won't just sulk. There's every possibility they'll take legal action against you. That's why it's important to keep clients happy.

More Advice, News & Know-how

Sign up to being prepared and protected

Get reliable advice on protecting and fine-tuning your business or charity sent straight to your inbox. Plus, receive other occasional bits we think you'll enjoy, like competitions and offers. We promise not to swamp you, and you can unsubscribe easily.

Sign me up