The right professional indemnity limit for your architecture practice?
The right professional indemnity limit for an architecture practice isn’t determined by what your regulator requires or what you paid last year. It’s determined by what you could realistically be liable for if something went wrong. Those two figures are often very different and the gap between them is where practices get into trouble.
Alexandra Henley, professional indemnity specialist at Konsileo, works through this with architecture practices at every renewal. Her starting point is always the same question: not what limit do you want, but what could you actually be liable for?
Why isn’t the headline limit on your PI policy always what it appears to be?
Before setting a limit, it’s worth understanding what that limit covers, because many practices assume the answer is everything, and it isn’t.
Most PI policies contain inner limits or sub-limits for specific sections of cover. A practice may see a £5 million limit on their policy and believe they have £5 million of protection across every type of claim. In reality, certain claim types may be subject to a much lower sub-limit, meaning the maximum recoverable in that area is significantly less than the headline figure.
This matters most in a claim. By the time a firm discovers the sub-limit, it’s too late to change it.
What’s the difference between aggregate and any-one-claim PI cover — and why does it matter?
How your limit is structured is as important as the amount. There are two main options:
Aggregate cover means the limit applies across the whole policy period. If you have £1 million aggregate cover and face two claims in a year, the first settling at £750,000, you have £250,000 left for the second. The pot doesn’t reset between claims.
Any-one-claim cover means the full limit applies to each individual claim. Two claims in the same year each have access to the full £1 million.
The distinction rarely feels important until a claim arrives. If a firm has made the same error repeatedly, the same specification issue across multiple projects, for example: aggregate cover can be exhausted quickly. For practices doing repeat work of a similar type, the structure of cover matters as much as the limit itself.
What factors determine the right PI indemnity limit for an architecture practice?
Several factors shape the appropriate figure, and the right answer differs for every practice:
- Contract values and liability exposure. The limit doesn’t need to match contract values pound for pound, but it should reflect the realistic financial impact of a significant error. What could the practice be liable for if something went seriously wrong on a major project? What would the knock on effect be?
- Client base. Claims brought by large corporates or high-net-worth individuals tend to be more substantial – these organisations have the resources to pursue losses fully. A practice working predominantly with commercial clients faces a different exposure profile to one focused on residential work.
- Project type and location. High rise buildings, rail-related work, offshore operations, and schemes in major cities carry higher potential liability than standard commercial work. Basement developments in London are a specific example where claims exposure has historically been significant.
- Fire safety and cladding exposure. Post-Grenfell, the PI market has softened, and more insurers are now offering broader fire safety cover than was previously available. But the underlying liability hasn’t changed. Claims arising from fire safety issues can run into millions. Any practice with higher-risk building exposure should treat this as a specific factor in its limit decision, not an afterthought.
- Contractual requirements. Some clients, particularly local authorities and larger organisations, specify a minimum PI limit in their contracts. Cover can often be increased mid-term, but this creates an unexpected cost. Some contracts also require the limit to be maintained for a number of years after the work is complete, given the claims-made nature of PI insurance.
Where do architecture practices go wrong when PI premiums rise?
When renewal premiums increase, the temptation is to reduce the limit to manage the cost. This is one of the most common and consequential decisions practices make at renewal and one of the most avoidable.
A cheaper policy with a reduced limit or more restrictive exclusions might save a few hundred pounds in year one. If a claim arises, that saving disappears immediately. The true value of PI insurance is how the policy responds when something goes wrong – not what it costs when nothing has.
The better question at renewal isn’t how do I reduce the premium, but whether the cover in place remains fit for purpose given the work being done and the liability being carried.
