Professional indemnity insurance explained: the 2026 UK guide

What is professional indemnity insurance?

Professional indemnity insurance (often shortened to PI or PII) pays to defend your business — and to compensate your client — if a client claims that your advice, designs, calculations or professional services were negligent and caused them financial loss. It covers the legal defence costs of fighting the allegation and any settlement or damages awarded, up to the limit of indemnity you choose.

It is the professional-services counterpart to public liability insurance: public liability deals with injury and property damage, while professional indemnity deals with the financial consequences of your professional work being wrong. If you sell knowledge, skill or advice — consultants, accountants, architects, surveyors, engineers, designers, IT contractors, trainers — a single disputed project can generate a claim far larger than the fee you earned from it, which is why regulators and most commercial contracts insist on cover being in place before work starts.

On price, the market is genuinely affordable at the small end: basic policies start from around £130 a year, and a typical UK micro-business pays roughly £150–£250 a year for £1 million of cover. For a full breakdown of premiums by profession, turnover and cover level, see our detailed professional indemnity insurance cost guide for 2026.

What it covers — and what it does not

A standard UK professional indemnity policy responds to claims of:

• Professional negligence — advice, designs, reports, calculations or code that were wrong and caused a client financial loss.
• Errors and omissions — mistakes or things left out of your professional work, even without negligence being proven.
• Unintentional breach of copyright or confidentiality — using material or disclosing information you should not have.
• Defamation — libel or slander in your professional output.
• Loss of documents or data — the cost of restoring client records you were responsible for.
• Legal defence costs — usually the largest part of a claim, paid even when the allegation ultimately fails.

It does not cover injury to people or damage to property (that is public liability), injury to your own staff (employers’ liability, which is compulsory by law), deliberate wrongdoing, claims you already knew about before the policy started, or contractual penalties and performance guarantees.

One structural point catches many businesses out: PI works on a claims-made basis. The policy that pays is the one in force when the claim is made, not when the work was done. Let cover lapse and even long-finished projects become uninsured — which is why continuous cover matters while trading, and why run-off cover exists for when you close, sell or retire. Many professional bodies require six years of run-off, and insurers commonly charge 225–400% of your final year’s premium in total across that period.