Professional Indemnity Calculator

Professional indemnity (PI) insurance protects against claims of negligence in professional services. Architects, engineers, consultants, accountants, IT service providers all carry PI. Recommended cover: 3x annual fee income or 5x largest contract, whichever higher. Claims history adjustment: prior claims typically push recommended cover 50% higher.

200,000 annual fee income × 3 = 600,000. 150,000 largest contract × 5 = 750,000. Pick higher: 750,000. If claims history exists, multiply by 1.5 = 1.125M. Typical PI premium: 0.5-2% of cover amount. 750k cover might cost 3-7k/year for established consultant.

PI is often mandated by professional bodies or client contracts. Architects: ARB mandates minimum 250k. Accountants: ICAEW requires 100k+. IT consulting contracts typically require 2-5M cover. Check professional body requirements and common client contract requirements before selecting cover level.

A worked example

With the defaults: annual fee income of 200,000, largest single contract of 150,000, prior claims of 0. The tool returns 750,000.00.

What moves the number most

The result responds to Annual Fee Income, Largest Single Contract, and Prior Claims (count).

The formula behind this

Cover = max(3 × fee income, 5 × largest contract) × (1.5 if claims history else 1).

Why it takes the greater of two figures

The suggested level takes the greater of a multiple of fee income and a multiple of the largest single contract, because either can be the source of the largest claim. At the defaults, three times 200,000 of fee income gives 600,000 while five times a 150,000 contract gives 750,000, so the larger figure is returned. A practice with one contract far bigger than the rest is sized by that contract rather than by turnover.

What the model cannot see

Claims history adjusts the figure upward, reflecting how insurers price prior notifications. Several things the model cannot see matter as much: whether cover is written on a claims-made basis and therefore needs run-off after the practice closes, whether defence costs sit inside or outside the limit, and the aggregate limit as distinct from the per-claim one. Contracts and professional bodies frequently specify a minimum, and that requirement overrides any calculated figure.