There is no universal Professional Indemnity Insurance limit applying to every Defence Contractor or Consultant.

The appropriate limit depends on the business and the contracts it performs.

What factors should be considered? #

These can include:

• Contractual insurance requirements.
• Type of professional services.
• Project values.
• Potential financial consequences of an error.
• Position within the supply chain.
• Work performed for Defence directly or through a prime contractor.
• Overseas work.
• Required period of insurance after completion.

Does the contract determine the limit? #

A Defence or prime contractor agreement may specify a minimum Professional Indemnity limit.

That requirement is important, but it should not automatically be treated as the appropriate limit for every exposure.

Some contracts can request limits that are:

• Higher than the business currently carries.
• Difficult to obtain.
• Disproportionate to the work being performed.

Can the required limit be negotiated? #

Sometimes, but this depends on the contracting party.

Webber Insurance can review whether the requested insurance limit is commercially available and how it compares with the business’s existing insurance.

Contractual negotiations themselves should be addressed with the appropriate legal or commercial advisers.

Should the limit remain in place after the contract finishes? #

Professional Indemnity Insurance is generally claims-made.

Contracts may require the policy to be maintained for a specified period after the work has been completed.

The required period should be identified before the business commits to the contract.