The Cover Note Is Not the Comfort: Five Liability Questions UK Clients Ask Too Late

Professional indemnity insurance arrives late in most consulting engagements. It appears as a certificate in a due-diligence pack, a line in the contract, or a request from procurement that is answered with a PDF. By the time the client reads the policy wording, the commercial terms are often agreed and the project is underway. That sequencing is understandable. It is also expensive.

What PI cover actually does

Professional indemnity insurance protects a consultant against civil liability arising from professional services, subject to the terms of the policy. It is usually written on a claims-made basis. That means the policy that responds is the one in force when a claim is notified, not necessarily the one in force when the work was done. A retroactive date may limit cover for work carried out before a certain point. The limit may be reduced by defence costs. Exclusions may remove whole categories of loss from cover.

None of this makes PI insurance a bad product. It is a sensible risk-transfer mechanism. The problem is that clients often treat the certificate as a warranty that they will be made whole if something goes wrong. It is not. It is evidence that the consultant has arranged insurance at a point in time. Whether that insurance responds to the client's actual loss is a different question.

The gap between the cap and the cover

Consulting contracts usually contain a liability cap. The cap may be expressed as a multiple of fees, a fixed sum, or the amount recoverable under insurance. Clients often assume the cap and the policy limit are the same. They frequently are not.

A contract might promise a cap of £1 million while the policy carries a £500,000 limit, a substantial excess, and a sublimit for cyber or data claims. Defence costs may erode the limit. The policy may exclude consequential loss, contractual penalties, or losses arising from late delivery. If the contract promises more than the policy covers, the consultant may still be liable in principle but unable to pay in practice. The client has bought a promise that is larger than the balance sheet behind it.

This is why the cheapest indemnity arrangement can be the most expensive comfort. A low premium may reflect a high excess, a narrow definition of professional services, or a limit that looks adequate until a serious claim arrives. The buyer who compares certificates on price alone is not comparing protection. They are comparing paperwork.

Five questions to ask before signing

The conversation should happen before the contract is executed, not after a dispute has crystallised. These five questions will not turn a client into an insurance broker, but they will expose the gaps that matter.

1. What is the limit, and is it per claim or in aggregate? Ask whether defence costs sit inside or outside the limit. A £1 million limit can be materially smaller once legal costs are deducted.
2. What is the retroactive date, and will run-off cover be purchased? If the consultant's policy is claims-made, the client needs to know that cover will remain available after the engagement ends.
3. Which exclusions or sublimits touch this brief? Data, cyber, intellectual property, consequential loss, and contractual penalties are common pressure points. Ask for the policy wording, not just the certificate.
4. Who is actually insured? Confirm the legal entity, the named individuals, and any subcontractors. If part of the team sits in a separate company, the main policy may not respond.
5. How does the contractual cap interact with the policy? The cap should be set with the insurance limit in mind. Ask what happens on notification, who is responsible for notifying the insurer, and whether the consultant has the financial standing to meet any shortfall.

These questions are not adversarial. They are the commercial equivalent of checking that the fire alarm is connected. A well-run consultant will have answers ready. A consultant who resists the questions is telling the client something useful.

The detail that protects the relationship

Insurance is often treated as a sign of distrust. In practice, it is a form of clarity. When the client and consultant agree what is covered, what is capped, and what happens if the work goes wrong, they remove a source of ambiguity that can poison a relationship later.

The certificate is not the comfort. The comfort comes from understanding the policy, matching it to the contract, and recognising where the client is carrying risk that no certificate can remove. UK buyers who ask these questions early will not eliminate risk. They will at least know what they are buying.