Businesses that provide advice, expertise, or professional services face a specific risk not covered by general liability policies — the risk that a client suffers a financial loss as a result of the work provided. Professional indemnity insurance is designed to address this, and understanding what it covers and who needs it is relevant for any founder working in a professional or knowledge-based capacity.
Professional indemnity insurance — sometimes called PI insurance — covers a business against claims from clients who allege that the work, advice, or professional service provided was negligent, incorrect, or fell short of the standard expected. It covers the legal costs of defending such claims and any compensation awarded. It is particularly relevant for consultants, accountants, designers, engineers, IT professionals, and anyone else whose work or advice directly affects a client's financial or business outcomes.
Professional indemnity insurance is a legal requirement for certain regulated professions in the UK, including solicitors, financial advisers, and architects. For other professions it is not mandatory but is frequently required by clients as a condition of engagement. Our guide to professional indemnity insurance covers what level of cover is appropriate, how to choose a policy, and when it is effectively required even if not legally so.