Professional Indemnity Insurance PI

Professional Indemnity Insurance

Insurance is a risk transfer mechanism against the payment of premium according to the nature and size of the risk. Most of the professionals like architects, engineers, consultants, solicitors, doctors, surveyors, etc. opt for this insurance cover as it provides the coverage against breach of their professional duty or services such as error, omission or negligence during the period of insurance.

Insurers issue this policy to the professionals subject to its terms, conditions, exclusions and limitations and indemnify the insured with regards to their legal liability towards the third party for claim arising out of their negligent act, error or omission.

Professional Indemnity insurance also covers the costs and expenses but these costs and expenses are part of limit of indemnity which should not exceed the limit specified in the policy.


With regards to the exclusions, this policy excludes pure financial losses, cyber risks, consequential losses, public and product liability, marine risks, libel and slander, dishonesty of employees, total asbestos and toxic mould, war and terrorism, pollution and contamination, etc.


However upon insured’s request, the insurers provide coverage as an extension under the policy for libel and slander, loss of documents, dishonesty of employees, infringement of copyright, breach of confidentiality, etc. at an additional premium and keeping these extensions as a part of policy aggregate limit and not in addition to the limit of indemnity.

Types of Professional Indemnity Insurance:

There are two types of professional indemnity insurance; annual basis and project-specific. An Annual PI policy is for 12 months period however, the Project Specific PI policy is for the complete project period including maintenance period plus extended reporting period which varies from project to project.

Risk Assessment:

In order for reinsurers to assess this risk, they would require particular information regarding the annual and project specific risks such as Insured’s activities and the project they are involved in, gross professional fees, contract value, project details, period of insurance along with required Extended Reporting Period, required limit of indemnity and extensions if any.

Applicable Wording:

Insurers mostly used wording for professional indemnity insurance which is specific to the profession of the Insured with respect to the annual one. On the other hand, there are wordings available for project specific PI which contains normal cover however, wider coverage is also available which provides extensions within the wording.

Hence, professional indemnity insurance provides protection to the Insured in order to indemnify them against their negligent error, negligent omission or negligent act while performing their duties.

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