Professional indemnity insurance and product liability insurance

Professional indemnity insurance

Professional indemnity insurance (PII) provides a professional person or business with an indemnity against claims or losses arising out of negligent acts, errors or omissions connected to the insured professional practice. PII also typically extends to the acts, errors and omissions of past employees. In construction projects, the most common risk that PII is intended to cover are claims arising out of the insured’s design responsibilities.

Any business that provides advice, consultancy or specialist services should consider whether it needs to take out PII cover.

Building contracts, professional appointments, sub-contracts and collateral warranties commonly require that PII is taken out and maintained by contractors, consultants and sub-contractors (as the case may be).

Guidelines and policy wording are produced by industry bodies, including the Architects Registration Board, Royal Institute of British Architects, Association for Consultancy and Engineering and Royal Institution of Chartered Surveyor. For some professions, ie architects, having PII in place is compulsory. While PII is not always compulsory, operating without PII is unthinkable because of their level of potential risk if problems occur and negligence claims are