Professional indemnity insurance - your worst case scenario...?

man in glasses with a shocked look on his face staring at computuer screenDetermining the right level of professional indemnity insurance cover for your business... not an exact science, but making a wrong decision can be catastrophic. So rather than picking a random figure that may or may not be adequate to fully protect your business, the limit of indemnity needs careful consideration.

You can read our guidance note A Guide To Your Limit of Indemnity for some detailed information on this subject, but what follows here are three important points you really should consider before making your decision;

Worst Case Scenario

First and foremost ask yourself what are your professional negligence risks and what's the worst that could happen. Think about the type of clients you work for and the consequences of making a serious mistake. Is your work critical to a business running smoothly and what's the worst thing that could go wrong? Could you screw-up a whole project or perhaps your clients entire business?

Don't just consider the most likely thing to go wrong, but consider your worst case scenario!

Client Requirements

Some clients like government departments and large companies will tell you the minimum level of professional indemnity insurance they need you to have in place. It could be a very large number and they may also require you to maintain the same level of cover for a specific number of years (usually 6 years) after your work has finished, in case they discover an error in the distant future.

This requirement will have cost implications and you may want to check this out with your client before accepting the contract. are still responsible for the quality of your work for many years after the work is completed.

Professional Compliance

Most professional bodies and good associations have a minimum level of cover that their members must have in order to retain membership. These include the Institute of Chartered Accountants, the Royal Institution of Chartered Surveyors, to name just a few. This ensures their members have a prescribed minimum amount of cover to protect their clients as well as themselves. But this is only their prescribed minimum which may not be enough to cover your own specific risks.

Get Expert Advice

For advice or more information about the main risk factors to consider when making your deciding your level of cover, please call us on 0345 251 4000 or email your enquiry to