What limit of indemnity do I actually need?

The limit of indemnity is the maximum your insurer will pay. Choose it too low and a single serious claim exhausts the policy and lands on you personally. Choose it far too high and you overpay every year for protection that bears no relation to the work you do. Here’s how to size it properly.

Start with what you’re contractually obliged to hold

For most firms, the answer is set externally before it’s set commercially. Client contracts routinely specify a minimum PI limit — £1m is the most common in the UK for professional services, £2m for larger corporate and public-sector work, and £5m or more for major construction and infrastructure projects. Framework agreements and PSL applications almost always state a figure.

Regulated professions have mandatory floors set by their regulator or professional body. Solicitors, accountants, surveyors, architects, financial advisers and insurance intermediaries all have prescribed minimum terms — and those minimums usually dictate the wording as well as the number. If you’re regulated, start with your regulator’s current requirements and treat them as a floor, not a target.

Then size it against your actual exposure

Where there’s no contractual requirement, the honest test is: what is the largest financial loss a client could suffer because of a mistake in my work? Not your fee — their loss. A £5,000 piece of tax advice can cause a £400,000 liability. A specification error on a £40,000 design job can cost millions to remediate on site.

Practical anchors: the value of the projects you advise on, the size of the transactions you touch, the number of clients who could be affected by the same systemic error, and the largest single contract in your pipeline. Firms whose work feeds into construction, finance or safety-critical systems should sit well above their turnover.

Any-one-claim vs aggregate — the distinction that matters most

An any-one-claim limit gives you the full amount for every separate claim in the policy year. An aggregate limit is the total for the whole year, however many claims arrive. A £1m aggregate policy that pays £800,000 on a claim in March leaves you with £200,000 for the remaining nine months.

Aggregate wordings are cheaper and common in the online market. If your work carries any risk of multiple claims from a single systemic error — the same flawed advice given to thirty clients, the same design detail repeated across a development — aggregate cover is genuinely dangerous. Check which you have; many firms assume they have any-one-claim and don’t.

Defence costs: inside or in addition?

PI claims are frequently defended successfully — and defending them is expensive. Legal costs of £100,000+ on a moderately contested claim are unremarkable. If your policy has costs inclusive, every pound of legal spend erodes the limit available to settle. If costs are in addition, the full limit remains available for the settlement.

Two policies both described as “£1m PI” can therefore differ enormously. When comparing quotes, this is the second question to ask after any-one-claim vs aggregate.

Rules of thumb, honestly stated

Sole-trader consultants with low-value advisory work and no contractual requirement commonly hold £250,000 to £1m. Small agencies, IT firms and design practices most often sit at £1m to £2m. Firms working with large corporates, in construction, or handling financial matters typically need £2m to £5m. But these are patterns, not prescriptions — the contract in front of you and the loss a client could suffer beat any rule of thumb.

Getting it right without overpaying

Because higher layers of cover are proportionally cheaper, stepping up from £1m to £2m usually costs far less than people expect — often 30–50% more premium for double the protection. If you’re close to a decision point, the extra layer is generally good value. Premier Insurance has placed professional indemnity since 1983; send us your client contracts and we’ll tell you what limit and wording actually satisfy them.

Related professional-indemnity insurance guides

• How much does professional indemnity insurance cost in the UK?
• Professional indemnity vs public liability: what's the difference?
• Retroactive dates and claims-made cover explained
• Do I need run-off cover when I close or sell my business?
• Professional indemnity for consultants and contractors

Speak to a UK insurance broker

Premier Insurance has been arranging UK professional-indemnity insurance since 1983. We are FCA regulated, BIBA members, and place cover with 200+ insurers including Lloyd's of London. Call 020 8908 2426, WhatsApp 07728 305383, or email hello@premier-insurance.co.uk. See our professional-indemnity Insurance page for full cover details.