How to secure professional indemnity insurance

If your business involves providing advice, structural calculations, or designs—or if you manage subcontractors who perform this work—you must secure Professional Indemnity (PI) insurance. Unlike Public Liability, which covers physical damage or injury, PI insurance covers you if a client suffers a financial loss because of a mistake in your professional services or advice. It is the essential safety net that pays for your legal defence and any compensation awarded to the client.

Who needs Professional Indemnity insurance?

In the UK construction industry, you typically need PI insurance if you:

• Provide "Design and Build" services.
• Offer professional advice or consultancy (e.g., project management).
• Provide technical drawings or structural calculations.
• Are responsible for the work of architects or engineers as part of your contract.

How to secure the right policy

1. Assess your risk: Review your contracts. If you are responsible for how something is built (not just the physical building of it), you have a design risk.
2. Determine the level of cover: Most commercial clients or local authorities will specify a minimum level of cover in their contracts, often ranging from £1 million to £5 million. Check your tender documents before getting a quote.
3. Gather your business data: Insurers will want to know your expected annual turnover, the types of projects you handle, and your professional experience or qualifications.
4. Consult a specialist broker: Construction is a high-risk area. Use a broker who specialises in the trade to ensure you aren't paying for "off-the-shelf" cover that doesn't actually protect you in a design dispute.
5. Complete the proposal form: Be 100% honest about the scale of your projects. Any inaccuracies could lead to a claim being rejected later.

Key differences to understand

It is important not to confuse Professional Indemnity with other common insurances. The table below highlights the differences:

Insurance Type	What it covers	Example Scenario
Public Liability	Injury or property damage.	You drop a tool and break a client's floor.
Professional Indemnity	Professional errors or bad advice.	A design error causes a wall to crack, requiring a £50k repair.

Important tips and best practices

The "Claims-Made" Rule: PI insurance is usually "claims-made." This means the policy must be active both when the mistake happened and when the claim is actually made. Never let your cover lapse, even between projects.

• Check your subcontractors: If you hire a designer, ensure they have their own PI insurance. However, you should still have your own "contingent" PI cover in case they disappear or their insurance fails.
• Retroactive Cover: If you have been working without PI insurance, ask for "retroactive cover" to protect you against claims arising from work you did in the past.
• Run-off Cover: If you decide to close your business or retire, you should maintain "run-off" cover for several years, as design-related issues can take a long time to surface.