What to Look for in a PI Insurance Policy

Not all PI policies are equal. Policy limits, excess amounts, coverage scope, and exclusions vary dramatically. Understanding what's inside your policy prevents costly surprises when you need it most.

Policy Limits and Coverage Scope

Your policy has two key limits: per-claim limit (e.g., £1m) and aggregate limit (e.g., £2m). Per-claim is what you're covered for on a single claim. Aggregate is the total across all claims in one year. If you have two £1m claims, aggregate matters—if it's £2m, you're covered; if £1m, second claim is uncovered. Confirm your limits match contract requirements. For architects and solicitors, regulatory bodies often mandate minimum limits. Ensure scope includes all your work (design, advisory, project management, etc.). If you later do work outside declared scope, claims may be denied.

Excess (Deductible) and Costs

Excess is what you pay toward each claim before insurance kicks in. Common ranges: £1,000-£5,000. Higher excess = lower premium, but ensure you can afford it. If excess is £5,000 and claim is £8,000, you pay £5,000, insurer pays £3,000. Understand whether excess applies per claim or annually. Annual excess means you pay once per year, then insurance covers. Per-claim excess applies to every claim separately. Also check: are defense costs deducted from limit, or in addition? Best policies have defense costs added.

Claims-Made vs. Occurrence Policies

Most UK PI is claims-made: policy covers claims made during the policy period, even for work done years ago. Occurrence policies cover work done during the period, regardless of when claimed (more expensive). Claims-made requires 'tail cover' (run-off cover) if you retire or exit the profession, extending the reporting period (typically 6 years) so past claims can still be reported. Without tail cover, retiring = uninsured risk for old work. Budget £2,000-£5,000 for tail cover when exiting.

Exclusions and Limitations to Review

Every policy excludes certain risks. Common exclusions: dishonesty, fines or penalties, work in unregistered jurisdictions, or specific service lines you didn't mention. Read the 'Exclusions' and 'Limitations' sections carefully. Ask your insurer: "Does this exclude X?" in writing. Example: Does it exclude cyber claims? Does it exclude advisory work? Some policies have 'known circumstances' clauses—if you know a potential claim exists before policy starts, it won't be covered. Disclose everything to your insurer on application to avoid this trap.

Run-Off / Tail Cover and Extended Reporting

If you're nearing retirement or selling your business, ask about tail cover. Most insurers offer 6-year extended reporting period (standard in UK) for 1-3x your annual premium. This is critical—without it, work you did 5 years ago becomes uninsured after you retire. Get tail cover before your final policy ends. Some policies include a free 6-month extension if policy cancels non-renewal (not if you cancel). Check your policy wording for this.

Client and Third-Party Notifications

If contracts require your insurer to notify clients of any changes, ensure your policy allows this. Some policies restrict who the insurer can inform about claims. Verify you can name main contractors as 'interested parties' (notified of claims) without additional fees. For software developers and tech consultants, check if policy covers SaaS clients and third-party liability.

"Read your policy limits and exclusions before you need them. A vague policy is worse than no policy."

— Claims Handler, Insurance Firm

Frequently Asked Questions