How much professional indemnity insurance do I need?

The amount of professional indemnity (PI) insurance you may need varies as every business faces different risks. Many factors influence the level of professional indemnity insurance that you require, including the type of work you do, who your clients are, and the potential financial impact if something goes wrong. 

Professional indemnity insurance is designed to protect you if a client claims your advice, services, or work has caused them a financial loss. This typically includes the cost of defending the claim, as well as any compensation that may be awarded, even if the claim is unfounded. For an in-depth explanation of what professional indemnity is, visit our dedicated article. 

To help you choose the right level of cover for your business, including what factors to consider and the typical levels of cover offered, read our simplified guide below. 

The importance of choosing the right level of professional indemnity insurance cover  

Ensuring you have the right level of professional indemnity insurance is essential to protecting your business. 

If you choose a level of PI cover which is too low, you could be left paying legal fees or compensation out of your own pocket. On the other hand, if it is much higher than your real exposure, you may be paying more than necessary for your business. 

When choosing how much professional indemnity cover you need, aim to secure cover that reflects the realistic risks that your business faces. 

Factors determining how much professional indemnity insurance you need 

1. The type of work you do 

Some professions carry a higher risk of claims than others, for example if your clients rely heavily on your advice, designs, reports, or technical expertise, then the potential financial impact of an error can be significant. 

Higher-risk professions can often include: 

Where mistakes can delay projects, cause financial loss, or require expensive corrective work, choosing a higher limit of indemnity is usually wise. 

2. Client, contract, or regulatory requirements 

Some clients may specify a minimum level of professional indemnity insurance as part of their contract, such as £1 million, £2 million, £5 million or more. 

Markel Direct advises researching if your profession is regulated and if you must hold PI insurance to practise. If you work in one of these sectors, the minimum level of cover may be set by your professional body or regulator, for example the Royal Institute of Chartered Surveyors have their own PI insurance requirements.  

Even where PI insurance is not legally required, clients may still insist on securing the cover before agreeing to work together, particularly for higher‑value or higher‑risk contracts. 

3. The value of your projects and clients 

It can be helpful to uncover the worst‑case financial loss a client could claim if something went wrong, so that you are able to work out the extent of cover you may need. This could include: 

If you frequently work on large or complex projects, or if a small error could have costly consequences, your level of PI cover should reflect these risks. 

4. Legal defence costs 

Professional indemnity claims can involve extensive legal defence costs, even if the claim is ultimately unsuccessful. Solicitors’ fees, expert reports, and court costs are some of the expenses to consider when deciding how high you want your level of PI cover to be. 

Typical professional indemnity insurance levels 

The right level of cover will depend on your specific activities, not just your job title, however the following levels are most common and are offered by Ollo Insurance: 

Is there a legal minimum for professional indemnity insurance? 

Some professions are required by law or regulation to hold professional indemnity insurance, such as financial services, legal services, surveying, and architecture. 

If you are not in a regulated industry, PI insurance may not be legally compulsory, however it can still be valuable protection for any business providing professional advice or services. 

What happens if your professional indemnity cover is too low? 

If a claim exceeds your policy limit, you may have to cover the excess costs personally. In these situations, insufficient cover can negatively impact your business finances and the future of your business. 

How to choose the right level of professional indemnity cover 

When deciding how much PI insurance you need, you can consider: 

Choosing the cover that protects you against realistic worst‑case scenarios can be beneficial, rather than solely focusing on meeting the lowest requirements. 

The right level of cover can provide reassurance, support your professionalism, and allow you to focus on your work. If you regularly review your services, contracts, and risk exposure, you may benefit from being more informed and able choose cover that remains appropriate as your business grows.