When a client says your advice cost them money.
Every CA and law firm carries one risk that has nothing to do with how good it is: a client who believes a filing, an audit or an opinion went wrong, and wants the firm to pay. Professional indemnity insurance is built for that moment.
In short
- PI pays the cost of defending a negligence claim, and compensation if one is awarded, up to the policy limit.
- Most PI is “claims-made”: it responds to claims made while the policy is live, for work done after the retroactive date.
- Keep the retro date unbroken when you renew or switch insurers. A gap can leave years of past work uncovered.
- Retiring or departing partners need run-off cover for claims that arrive after they leave.
What claims look like for CA and law firms
- A missed deadline.A return filed late leads to interest and penalties, and the client holds the firm responsible.
- An audit that didn’t catch it.A fraud surfaces after the audit, and the company or its lenders claim the audit should have found it.
- Advice that didn’t hold.A tax position or structuring opinion is challenged, and the client claims the advice was negligent.
- A contract that went wrong.A clause drafted or reviewed by the firm fails in a dispute, and the client claims the loss.
- A lost document or data leak.Client records are lost or exposed, and the client claims damages.
Illustrative scenarios only, not real cases.
What PI covers, and what it doesn’t
| Usually covered | Usually not covered |
|---|---|
| Legal defence costs, even if the claim is groundless | Fraud or dishonesty by the insured |
| Compensation awarded or settled | Claims known before the policy started |
| Claims from errors, omissions and negligent advice | Fines and penalties that can’t legally be insured |
| Loss of documents (often as an extension) | Contractual guarantees beyond normal professional duty |
Exact wording varies by insurer. We read it with you before you buy.
Claims-made, retro date and run-off, in plain words
- Claims-made: the policy that responds is the one in force when the claim is made, not when the work was done.
- Retroactive date: the policy covers work done after this date. Keep it continuous at every renewal.
- Run-off: cover for claims that arrive after a partner retires or a firm closes. Plan it before the exit, not after.
How the three fit together
Work done here isn’t covered. A break at renewal moves this line forward.
Work done here is covered, as long as the claim arrives while a policy is live.
A claim made now goes to this year’s policy.
Run-off cover picks up claims that arrive later.
Firm cover or individual cover?
Firm cover protects the partnership or LLP and its people for work done in the firm’s name. Individual cover suits sole practitioners and professionals who also take work in their own name. Many firms need firm cover with all partners named.
How much cover?
It depends on the size of your largest engagements, your client mix (listed companies, lenders, regulated entities), what your engagement letters say about liability, and whether any client contract requires a minimum limit. We work it out from your engagement profile. No fixed price, because the right premium depends on that profile.
Why use a broker
Insurers word PI differently, and the differences decide claims: the retro date, defence-cost sharing, the definition of “professional services”, exclusions for specific work. We compare the wordings, check the retro date carries over, and when a claim comes, we argue it for you.
Questions
Does PI cover claims from work done before I bought it?
Only if that work falls after the policy’s retroactive date.
What happens when a partner retires?
They need run-off cover for claims that arrive later. Plan it before they leave.
Can a small practice buy PI?
Yes. Sole practitioners and small firms can buy individual or firm cover.
How long does it take to get a quote?
It depends on the proposal form and the insurer. We tell you upfront what’s needed.
20 minutes with a Growth Advisor. No obligation.
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