Professional Indemnity (PI) insurance provides financial protection for professionals in a wide range of industries.

Businesses that provide a professional service (e.g. accountants, financial planners, management consultants, real estate agents etc.) are regarded by their clients as experts in their fields. In such a litigious environment, clients will not hesitate to make a claim against these 'experts' where they believe they have suffered as a result of their actions.

In addition, many professional bodies require PI insurance as a pre-requisite to obtaining a practicing certificate or membership of the association.

What is PI insurance?

PI insurance generally indemnifies the insured for a claim that is first made while the policy is in force as a result of a breach of professional duty in respect of the conduct of the professional business.

This class of insurance is written on a 'claims-made basis'. This means that that the policy provides cover for claims made during the period of insurance in respect of professional services provided after the retroactive date, subject to the terms and conditions of the policy in place at the time. The retroactive date will be specified in the policy schedule

All PI insurance policies will have a 'limit of indemnity' and a 'deductible'. The limit of indemnity is the maximum amount that the insurer will pay for any one claim.

The deductible applies for each claim such that the amount of each claim up to the deductible must be paid by the insured.