Updated version published July 2026 (previous version published March 2007)

A professional indemnity policy is no more than a contract between a professional and an insurer. Through a professional indemnity insurance policy, an insurer will (subject to the policy terms, cover being confirmed, looking at the facts on a case-by-case basis and payment of any uninsured excess) meet the insured professional’s ascertained liabilities when they fall due. Essentially then, professional indemnity insurance is a form of risk transfer – the insured transfers their possible future liabilities into a current, certain and quantifiable obligation to pay an insurance premium.

Informed clients regard an adequate level of professional insurance as a prerequisite, and increasingly laboratories and other providers of advisory services are expected to have insurance in place.

In recent years professional indemnity premiums have risen as have the levels set for uninsured excesses while at the same time the levels of indemnity offered by insurers have generally fallen. As a result of this, some professionals may be tempted to operate without professional indemnity insurance cover.