Most tradespeople think of their insurance in terms of what could go wrong physically. A customer tripping over their equipment, a burst pipe in the wrong place, a roof tile landing on the wrong car. But there's another kind of claim that's increasingly common in the trades, and it doesn't involve anything you can see or touch.
If a client claims that your professional advice, a design you provided or a specification you put together caused them a financial loss, that's a different kind of legal exposure altogether. It's what Professional Indemnity Insurance is there to cover.
In this guide, we break down exactly what Professional Indemnity Insurance is, who needs it, what it covers, and how it fits alongside the rest of your trade insurance.
Want to add Professional Indemnity Insurance to your cover? Get a quote from Rhino today.
Professional Indemnity Insurance (PI) covers you against claims arising from a negligent act, error or omission in the professional services you provide as part of your business. In plain terms: if a client says your professional advice, your design, your specification or your recommendations caused them a loss, PI insurance covers the legal costs and any compensation you're found liable to pay.
It's a different type of cover from Public Liability Insurance. Public Liability covers physical harm - someone gets hurt, or something gets damaged as a direct result of your work on site. Professional Indemnity covers the consequences of your professional judgement - advice you gave, a drawing you produced, a specification you signed off on.
For many tradespeople, the line between the two isn't always obvious.
If any part of your work involves providing advice, designs, specifications, plans or recommendations as a professional service, you may want to think about Professional Indemnity Insurance.
In the trades, this is more relevant than many people assume. Consider these situations:
An electrician designs a wiring layout for a commercial property, and a fault in the design causes a system failure.
A plumber specifies a heating system for a new build, and the specification proves inadequate, leading to costly remedial work.
A builder advises on the structural approach to an extension, and the approach proves to be flawed.
In each case, the physical damage might be covered under Public Liability Insurance, but the professional advice or specification that led to it would need Professional Indemnity cover to fully protect you.
If you're a sole trader providing professional services alongside your practical work, PI insurance matters just as much to you as it does to a large firm.
Professional Indemnity Insurance covers your legal liability for claims arising from negligent acts, errors or omissions committed by you or any employee in the conduct, performance and execution of professional services provided in connection with your business.
In practice, that means it covers:
Compensation you're found legally liable to pay to a client as a result of a professional services claim
Legal defence costs, including solicitor and barrister fees, incurred with our prior written consent
Legal expenses arising from representation at a coroner's inquest or fatal accident enquiry
Legal costs of defending proceedings in any court relating to a covered claim
Cover is provided on a claims-made basis. This means the claim must be first made against you during the period of insurance and notified to us during that same period. The professional services that gave rise to the claim must also have been provided on or after the retroactive date specified in your policy.
What is a retroactive date?
Because Professional Indemnity Insurance operates on a claims-made basis, your policy will specify a retroactive date. This is the earliest date from which professional services you provided can give rise to a covered claim. Any claim relating to professional services carried out before this date is not covered, even if the claim is made while your policy is active.
When you first take out PI cover, your retroactive date is typically set to the policy start date. If you renew year on year, it's worth checking that your retroactive date doesn't move forward, as that would leave a gap in your cover for services carried out in earlier years.
What is the excess on a Professional Indemnity Insurance claim?
The excess on a Professional Indemnity Insurance claim is £1,000 for each and every claim. It's your first contribution towards the cost of any covered claim before the policy responds.
There are a number of exclusions to be aware of:
Any claim that was made, threatened or intimated before the current period of insurance started
Claims relating to professional services provided before your retroactive date
Any judgment or settlement made outside the courts of England and Wales, or by a court outside the UK
Claims brought against you by associated, parent or subsidiary companies (except where the claim arises from services provided to an independent third party)
Reimbursement of fees, commission or other charges paid to you or any of your employees
Work undertaken outside the territorial limits
Express warranties or guarantees where you've taken on liability beyond what would otherwise apply to you
Circumstances, facts or events you were aware of at inception that could reasonably have been expected to give rise to a claim
Negligence in connection with providing financial advice or advice on financial matters
Negligence in connection with construction estimates compiled by professionally qualified quantity surveyors
Trading losses or your own insolvency
Dishonest, fraudulent, malicious or illegal acts by you or any of your employees
Data protection breaches
For work connected with biomass, anaerobic digestion, hydroelectric, ground source or air source heat pumps: any negligence in providing advice of a financial nature
This is one of the most common questions in trade insurance, and the distinction is worth understanding clearly.
Public Liability Insurance covers you when something goes physically wrong as a result of your work. A third party is injured. Their property is damaged. The harm is tangible and can usually be traced directly to an act or omission on site. Read more about PL in our guide.
Professional Indemnity Insurance covers you when the advice, design, specification or professional judgement you provided is what goes wrong. The harm might still be physical, for example, a roof that leaks, a structure that fails, but the claim is about the professional decision-making that led to it, not just the physical work itself.
In practice, many claims in the trades involve both elements. That's why having both types of cover working together within the same policy makes sense.
If your work as a sole trader involves professional services such as advice, designs, plans, specifications or recommendations that a client might rely on and later claim caused them a loss, then yes, Professional Indemnity Insurance is relevant to you.
Some clients and contracts will specifically require it. Architects, surveyors, engineers and other design professionals often make PI cover a contractual condition before they'll bring in a subcontractor or specialist. If your work takes you into those environments, check the contract before you start.
The cost of Professional Indemnity Insurance depends on the nature of the professional services you provide, your annual turnover, the value of the contracts you typically work on and the limit of indemnity you require. For tradespeople adding PI cover alongside their existing trade insurance, the additional premium is often more modest than you'd expect.
Rhino’s Professional Indemnity Insurance starts from £5.00 per month, and you can grab a quote here.
If you give professional advice, produce a design or provide a specification as part of your work, and a client claims that the advice was negligent and cost them money, Professional Indemnity Insurance covers your legal defence costs and any compensation you're found liable to pay. It's protection for your professional judgement, not just the physical work you carry out.
No, they cover different things. Public Liability Insurance covers accidental injury to third parties and accidental damage to third-party property arising from your work on site. Professional Indemnity Insurance covers claims arising from your professional advice, designs or specifications. Many tradespeople need both.
If your work is entirely practical and you carry out the physical job and don't provide any professional advice, designs or specifications, then PI cover may be less relevant to you. But the more your work involves advising clients, producing design drawings or specifying materials and systems, the more important it becomes. If in doubt, talk it through with our team.
A claims-made policy covers claims that are first made against you during the current period of insurance, regardless of when the work that gave rise to the claim was carried out (as long as it was after your retroactive date). This differs from an occurrence-based policy, which covers events that occur during the policy period regardless of when the claim is made. The key implication is that you need to maintain continuous cover; if you let your PI insurance lapse, you lose protection for claims that arise after cancellation, even if the services were provided while you were insured.
The retroactive date is the earliest date from which professional services you provided can give rise to a claim under your current policy. Services provided before this date are not covered, even if a claim is made during your current period of insurance. When you first take out PI cover, the retroactive date is usually set to the policy start date. Maintaining continuous cover and ensuring your retroactive date doesn't move forward at renewal is important to avoid gaps.
Yes. Here at Rhino, Professional Indemnity cover is available as part of your trade insurance, with Professional Indemnity Insurance being an extension to your Public Liability Insurance rather than as a completely separate policy.
Whether you're providing designs, specifications or professional advice alongside your practical work, it's worth making sure you have the right cover in place. Talk to the team at Rhino, and we'll help you work out what you need.
Professional Indemnity Insurance protects tradespeople if a client claims your advice, design or specification caused them financial loss. This guide explains what's covered, who needs it, how the claims-made basis works and what it typically costs.
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Two policies with similar names that appear to do roughly the same thing on the outside. We can understand your confusion. Now, let us put your mind at rest.
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