Professional Indemnity Insurance for Consultants & Service Businesses
Protection against claims that your professional advice, service or work caused a client financial loss.
Professional indemnity insurance (also called errors & omissions cover) protects you if a client claims your professional service, advice, or deliverable caused them a financial loss — even if the claim is eventually found to be unfounded, since legal defence costs alone can be significant.
It's increasingly required contractually by larger clients before they'll sign a services agreement with consultants, agencies, IT service providers and other professional firms.
Who typically needs this
- Consultants, agencies and freelancers providing professional advice or deliverables to clients.
- IT services, software development and design firms, especially those handling client data or systems.
- Doctors, architects, engineers, chartered accountants and other licensed professionals.
- Any business where a large client requires proof of professional indemnity cover before signing a contract.
What it usually covers
Legal defence costs
Covers the cost of defending a claim of professional negligence, error or omission, even if the claim doesn't ultimately succeed.
Damages & settlements
Covers compensation you're legally required to pay if found liable for a covered claim, up to your policy limit.
Retroactive cover
Some policies cover claims arising from work done before the policy started, as long as the claim is made during the policy period — worth checking specifically.
Mistakes people commonly make
Do this
- Check whether the policy covers claims made during the policy period regardless of when the work was done (“claims-made” basis), which is standard — understand what happens if you stop renewing.
- Match your cover limit to the size of contracts you sign — some clients contractually require a minimum limit.
- Disclose your actual scope of services accurately — a mismatch between declared and actual services can void a claim.
Avoid this
- Assuming general liability insurance covers professional negligence claims — it typically doesn't; they're different covers.
- Letting the policy lapse right after finishing a project — claims can surface months or years after the work is delivered.
- Under-declaring your revenue or scope of work to reduce premium, which can affect claims later.
Questions worth asking any agent or insurer
- Is this a claims-made policy, and what happens to claims made after I stop renewing (do I need “run-off” cover)?
- What is the maximum cover limit per claim and in aggregate for the year?
- Are subcontractors or specific services I offer excluded?
- Is cyber-related professional liability included, or does it need separate cyber insurance?
Frequently asked questions
Increasingly yes — many clients now require proof of cover before signing a contract, and even without that requirement, it protects your personal finances if a client alleges your work caused them a loss.
It depends on your contract sizes and industry norms — many service businesses start around ₹25 lakh-₹1 crore, but larger enterprise clients may require significantly more.
No. General liability covers physical injury or property damage. Professional indemnity covers financial loss from your professional advice, service or work — most service businesses need both, for different risks.
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