Common PI Insurance Exclusions

Every PI policy excludes certain risks. Some exclusions are standard (fraud, penalties); others are negotiable (territorial limits, specific services). Understanding what's excluded prevents costly surprises when you need cover most.

Fraud, Dishonesty, and Criminal Acts

All PI policies exclude fraud and deliberate dishonesty. If you knowingly provide false advice to a client for financial gain, PI won't cover it. Gross negligence (reckless disregard) may be covered depending on policy wording, but willful or deliberate misconduct is never covered. This is intentional—insurance doesn't cover criminal acts. If you're accused of fraud, disclose immediately to your insurer even if you believe claim is false.

Penalties, Fines, and Regulatory Violations

Regulatory fines (FCA fines, ICO penalties, RIPA breaches, professional body sanctions) are universally excluded. PI covers professional negligence, not regulatory punishment. However, 'regulatory defense' add-ons exist (expensive, 50-200% premium increase) covering legal costs to defend against regulator. For accountants and solicitors, consider regulatory defense given compliance risk.

Prior Acts and Retroactive Date

PI policies have 'retroactive dates' (effective dates). Work done before that date isn't covered, even if claim arises later. Example: policy starts January 1, 2026; error you made December 2025 isn't covered. Most standard policies start cover from policy inception, but if you switch insurers, check if new policy includes prior acts endorsement (covers old work, usually costs 10-20% extra and requires underwriter approval).

Non-UK and High-Risk Territories

Standard UK PI excludes work in non-UK jurisdictions or 'high-risk' countries. Territories with weak legal systems or unstable regulations are often excluded. To cover overseas work, you need territorial extension endorsement or specialty overseas PI policy. Cost: 20-50% premium increase for EU/North America; 50-100%+ for emerging markets. Some countries uninsurable (Syria, Iran, North Korea, etc.).

Undisclosed Services and Scope Exclusions

If you perform services not listed on your policy application, they may be excluded. Example: policy covers 'design consulting' but not 'expert witness testimony'—if you do expert work, claim denied. When applying, list all services you perform or plan to perform. If scope changes (new service line, new client type), notify insurer in writing. Some additions require formal endorsement; others are automatic at renewal.

Known Circumstances and Pre-Existing Claims

If you're aware of a potential claim before policy starts, it's excluded (even if not yet formally claimed). Example: client warns you of design error, policy starts next day, client sues—claim likely denied because you had 'known circumstance'. Disclose all potential issues to new insurer on application. If unsure, tell them anyway—better to declare and get answer than hide and face denial.

Cyber, Data Breach, and Technology Exclusions

Traditional PI excludes cyber liability and data breaches. As more professionals handle sensitive data, insurers carve out cyber risk. For software developers and IT consultants, ensure policy covers cyber claims (data loss, ransomware costs, breach liability). Cyber exclusions are common; negotiate this specifically or purchase separate cyber policy.

"Read exclusions before you buy. A denied claim costs more than a higher premium."

— Insurance Legal Advisor

Frequently Asked Questions