What is professional indemnity insurance?

Professional Indemnity Insurance (PI) is an insurance policy designed to protect professional contractors against potential claims for injury, damage or loss resulting from professional negligence in their work.[*]


As a professional contractor, it is your legal obligation to carry out any work you have promised to the expected standard. Failing to do so could make you liable for any loss or damage to people or property that occurs during the project.

Why PI cover is important

PI doesn’t only protect the contractor, it also provides the client with reassurance that the contractor can cover any claims made against them, should the contractor be responsible for any [1] loss as a result of negligent design, advice or testing.

How does it work?

PI works on a claims made basis.[2] This means your policy only covers you for claims made during the policy period. If a claim is made against you while you are not covered by PI, even if the incident occurred while your policy was in place, your insurer will not pay out.

Claims for negligence or professional liability can occur years after work is completed. It is therefore in your best interest as a professional contractor, to keep track of your insurance renewal dates and keep your policy up to date to protect against liability claims.

See below, a prime example of where PI Insurance could be essential for your business:

An electrician accepts a contract to design and carry out a rewiring at a property. The work goes ahead and once completed the property is redecorated.

Further down the line a different contractor is appointed to carry out some electrical work at the same property, however upon inspection of the previous work that has been designed and installed it comes to light that there are some issues with the work and it is not fit for purpose.

In order to complete the new works required the previous wiring has to be removed from the property and redone. As a result of this the homeowner looks to reclaim the cost of the original wiring work and the re-decoration of the property from the contractor responsible for the original work.

Saving on your PI

For the most comprehensive cover, it is important to make sure your insurance caters to the specific needs of your business. Having a tailored policy will not only give you confidence in your cover, but will also make your insurance more cost effective.


Other things to think about when searching for cost effective insurance include:

  •  Knowing your excess

The amount of excess you need will depend entirely on the size and scale of the jobs you do. Be sure to find a policy that best fits your excess requirements to stop you overspending while keeping you protected.

  • Monthly payments

Paying in monthly instalments is a great way for new businesses to maintain their insurance cover through flat periods.

  • Choose a reputable insurer

Being covered by a reputable insurer will give you confidence that any claims made against you will be dealt with efficiently and paid out if necessary. 


For further assistance in choosing the right policy for you, contact one of our NAPIT Insurance advisors on 03455 646173 or fill out the contact form on our website