How does an excess affect your premium?

A higher excess means a lower annual premium, and vice versa. By accepting a larger excess, you're agreeing to pay more out-of-pocket toward claims, which reduces the insurer's risk and cost. You can typically save 10-25% on your premium by increasing your excess from £500 to £2,500.

What's a typical excess range for PI insurance?

Common excess levels are £250, £500, £1,000, £2,500, and £5,000. For larger firms, excesses can be £10,000 or higher. Small sole traders typically start with £500-£1,000, while larger practices may accept £2,500+ to reduce premiums. Your profession and claims history influence what excesses are available.

Do you have to pay the excess upfront?

You pay the excess to your insurer after a claim is admitted, not upfront when you purchase the policy. When a claim is settled, you pay your excess toward the settlement, and the insurer covers the remainder up to your cover limit. This is a per-claim cost.

Is the excess the same for all claims?

Usually, yes—the same excess applies to each claim. However, some policies have different excesses for different claim categories. For example, you might have a £500 excess for professional negligence claims but a different excess for breach of confidentiality. Always check your policy wording.

Can you change your excess mid-year?

Typically, no—you choose your excess when you purchase the policy, and it remains fixed for the year. However, when you renew, you can opt for a different excess level. Some insurers allow changes if your business circumstances change significantly.

What is an Excess on Professional Indemnity Insurance?

An excess is the amount of money you agree to pay toward a claim before your insurance company contributes. For example, with a £1,000 excess, if you have a £15,000 claim, you pay £1,000 and the insurer covers the remaining £14,000 (up to your cover limit). It's a shared responsibility between you and the insurer. Higher excesses reduce your annual premium but increase your out-of-pocket cost if a claim occurs.

How does an excess work in practice?

When a client makes a claim against you, your insurer investigates and, if the claim is valid, you must pay your excess as a contribution. This is typically paid when the claim is settled or judgment is made. If you have multiple claims in a year, you pay the excess for each claim separately. The excess is designed to ensure you have "skin in the game"—a financial incentive to operate carefully and to challenge frivolous claims.

Industry practice: According to the Insurance Institute, approximately 65% of UK professionals choose a £500-£1,000 excess, balancing affordable premiums against reasonable out-of-pocket risk.

How does excess affect your insurance premium?

Higher excesses directly correlate with lower premiums. By accepting a larger excess, you're accepting more financial risk, which makes you less expensive for the insurer to cover. Typically, increasing your excess from £500 to £2,500 might reduce your annual premium by 15–25%. Conversely, reducing your excess (from £1,000 to £250) would increase your premium. This is a trade-off: lower premiums now versus higher out-of-pocket costs if you claim.

Premium impact: Market analysis shows a typical £1,500 annual PI policy might cost £1,275 with a £2,500 excess versus £1,500 with a £500 excess—a potential 15% saving for accepting higher risk.

What excess levels are typically available?

Common excess options range from £250 to £5,000, with some insurers offering higher excesses for larger firms. The most popular levels are £500, £1,000, and £2,500. Your profession, firm size, and claims history influence which excesses are available and their impact on premiums. Sole traders often start with £500–£1,000 excess, while larger practices may routinely accept £2,500+ to reduce premiums.

How to choose the right excess level

Consider three factors: your cash flow position, typical claim sizes in your profession, and your risk appetite. If you have strong cash reserves and few previous claims, a higher excess (£2,500–£5,000) is sensible and reduces premiums. If cash flow is tight or you work in a higher-risk area, a lower excess (£500–£1,000) provides peace of mind. Review claims data for your profession—if claims typically average £10,000+, a £500 excess is reasonable; if they average £2,000, you'd bear most claims anyway.

Are there different excesses for different types of claims?

Most standard PI policies have a single excess that applies to all claims. However, some policies distinguish between "any one claim" excess (per individual claim) and "in aggregate" excess (total excesses in a year). A few policies may offer tiered excesses—for example, £500 for negligence claims and £1,000 for breach of contract claims. Always read your policy wording to understand how excesses apply.

Policy structure insight: According to the British Insurance Brokers' Association, approximately 78% of PI policies use a single per-claim excess, while 22% offer aggregate or tiered structures.

Excess vs. cover limit—understanding the difference

Don't confuse excess with cover limit. Your cover limit (e.g., £1 million) is the maximum the insurer will pay toward a claim. Your excess (e.g., £1,000) is what you pay first. If a claim is £2 million and your cover is £1 million, you're liable for the excess (£1,000) plus everything above £1 million. The insurer only pays up to £1 million minus the excess. These work together to define your total protection.

Compare PI insurance in 60 seconds

Leo analyses the UK market and shows you policies side by side.

Get your quote

Frequently asked questions

Can you negotiate your excess with the insurer? +

Not typically—excesses are set by the insurer based on underwriting risk, and they're offered as fixed options during the quote process. However, when renewing, you can request a custom excess if you have a strong claims history. For large firms or those with brokers, there's sometimes flexibility, but standard policies offer limited negotiation.

Do you pay the excess if the claim is found in your favour? +

No, you only pay the excess if the claim is admitted (meaning your insurer agrees to defend it and potentially pay). If you're found not liable, the insurer covers all defence costs and you pay nothing. This is why prompt notification is critical—your insurer needs time to assess the claim's merit.

What if your claim is smaller than your excess? +

If a claim is £500 and your excess is £1,000, you'd pay the full £500 and the insurer pays nothing. However, the insurer would still cover legal defence costs—the excess applies to the settlement, not defence costs. This is a key advantage: the insurer always defends you, regardless of the claim's size.

Does excess carry over from year to year? +

No, excess is per-policy, per-year. If you claim £5,000 this year with a £1,000 excess (you pay £1,000, insurer pays £4,000), your £1,000 excess "resets" next year. Some policies might have an aggregate excess (total excesses for the year), but individual excesses don't carry over.

Can a high excess make it harder to claim? +

No—your insurer's duty to defend you and assess claims fairly doesn't change with excess level. However, a very high excess might deter you from reporting smaller incidents, which could be risky if they later develop into larger claims. Choose an excess you're comfortable paying if needed.