PI Insurance Requirements: What Every UK Business Must Know

If you run a business that offers advice, designs plans, or provides specialist services, you’ve probably heard of professional indemnity (PI) insurance. It’s not just a nice‑to‑have – many regulators and clients actually demand it. In this guide we break down who needs PI, how much cover you should carry, and the steps to get the right policy without overpaying.

Who Needs Professional Indemnity?

Almost any firm that could be sued for a mistake in its professional work should have PI. That includes architects, engineers, consultants, accountants, IT specialists, and even some freelancers. If you’re a contractor working for the public sector, the government often sets a minimum limit. For many small firms the rule of thumb is: if you charge for advice or design, you need PI.

How Much Cover Is Enough?

The required limit varies by industry. A typical accountant might be fine with £250,000, whereas an engineering firm could need £2 million or more. Look at the contracts you sign – they usually state the minimum amount. If you’re unsure, start with the lowest level your biggest client asks for and then consider raising it as your business grows. Remember, higher limits cost more, but they also protect you from a potentially ruinous claim.

Getting the right level isn’t just about numbers. Check the policy’s excess, what’s excluded, and whether it covers legal costs. Some insurers offer “run‑off” cover that protects you for claims made after a project finishes – handy for long‑term services.

Now, let’s talk about actually buying the policy. Shop around and compare quotes, but don’t pick the cheapest option blindly. A broker who understands your sector can save you headaches later. They’ll explain the fine print, negotiate the excess, and make sure the policy matches the contracts you sign.

When you apply, be ready to provide details about your services, turnover, and past claims history. Insurers use this info to set the premium. If you have a clean record, ask for a “no‑claims discount” – many providers shave 10‑20% off the price for each claim‑free year.

Once you have PI in place, keep it current. Policies usually renew annually, and you’ll need to update the insurer if you add new services or increase your turnover. Failure to maintain adequate cover can breach contract terms and lead to fines from professional bodies.

Finally, know what to do if a claim arises. Notify your insurer immediately – delays can jeopardise your coverage. Gather all relevant documents, such as contracts, emails, and work files, and let the insurer handle the legal side. Staying organized makes the process smoother and reduces the chance of a costly settlement.

Bottom line: PI insurance isn’t optional for most UK professionals. Identify your industry’s minimum, choose a limit that matches your biggest contract, and work with a broker who gets your business. Keeping the policy up‑to‑date and knowing the claims process will save you stress and money down the line.