Professional Indemnity; everything you need to know

PI which is short for Professional Indemnity is a type of insurance that covers compensation costs and other legal expenses your company may incur so your company does not take a financial nosedive. Professional indemnity however is not simply for any kind of profession. In this article, everything you need to know about Professional Indemnity will be highlighted. Also, see here for your General Liability.

Professional Indemnity; everything you need to know.

If you are seeking to start any kind of business, you need an umbrella or multiple umbrellas of insurance to cover your business and shield them from the pouring rain of unprecedented events that may occur every once in a while.

Professional Indemnity PI is one of the most important business insurance available and one of the cost recommended also.

In this article everything you need to know about professional indemnity will be highlighted in this format;

  • Definition
  • Are you obliged to have one
  • What does it cover
  • Who needs one
  • Long-term or short-term covers?
  • Costs

Professional Indemnity Definition.

Professional indemnity is the kind of insurance cut out for businesses providing services that help protect the business whenever a client claims your company, citing negligence which resulted in a loss for the client.

Are you obliged to have one?

The answer is no. No one is compelled by law to have a professional indemnity as a regular private business. But then, it is in your best interests as a small business owner to have one.

In other spheres, certain regulatory bodies have made it compulsory for some professions such as accountants, architects, and even solicitors to have a professional indemnity insurance

What does it cover?

In general and ordinary parlance, Professional Indemnity insurance covers damages as a result of negligence. But then, that is rather vast. Narrowing down the concept of negligence includes;

  • Unintentional breach of confidentiality
  • Infringement of copyright
  • Loss of Data
  • Slander and libel (Defamation)
  • Professional negligence

Who Needs One?

Every professional needs professional indemnity insurance, especially if you run your own business. However, some may need it more than others, for instance, businesses providing services like client data, intellectual property, or even professional advice to clients.

The following professions have also been posited as high-risk business and as such, should contemplate taking a professional indemnity cover;

  • IT consultants
  • Designers; marketing, graphics, photography
  • Surveyors 
  • Health care personnel
  • Architects amongst others.

Short Term vs. Long term Covers.

The average time for a professional indemnity cover is a year, twelve whole months. The purpose of this is that for you to claim the funds on your Professional Indemnity, the insurance has to be active at the time of damage as well as the time the notice of damage is brought to the notice of the insurance company, Hence, it is advisable to keep it running all year long and then continue to renew it.

Issues with conflicting covers?

Conflicting covers or misunderstanding occurs for most professionals when a claim is made by a previous client even after years of trading. Clients can make a claim even up to three years after the professional in question is out of the business and so it is important to still have the insurance running for about five more years after you may have ceased operations

Professional Indemnity Costs

The costs of professional indemnity largely differ and these differences are influenced by the size and type of your business. Also, it depends on how much you would like to cover.


In choosing a professional indemnity, you should ensure the insurance company’s policy tallies with your business’s needs. The best thing to do here is to speak with the company in person.