Professional indemnity (PI) insurance covers the compensation and legal costs your business must pay when a client suffers financial loss because of negligence, errors or omissions in your professional services — wrong advice, a defective design, a missed deadline, a breach of professional duty. It protects the quality of your work in the way public liability protects against physical accidents: if your expertise is the product, PI is the safety net under it.
What PI typically covers — and what it doesn't
A PI policy typically covers:
- Negligence — failing to exercise the skill and care expected of your profession.
- Errors and omissions — mistakes in deliverables, calculations, specifications or filings.
- Breach of professional duty — including, in many wordings, breach of confidentiality and unintentional IP infringement.
- Defence costs — often the largest part of a claim, payable even where you ultimately win.
It typically does not cover: bodily injury and property damage (public liability's job), deliberate or dishonest acts, contractual guarantees that go beyond your professional duty of care, or fines and penalties where these are uninsurable. As always, what a policy "typically covers" is settled by its wording — read it, or have a licensed professional walk you through it.
Claims-made: the mechanic that catches people out
PI is almost always written on a claims-made basis: the policy that responds is the one in force when the claim is made, not the one in force when the work was done. That has three practical consequences:
- Continuity matters. If you let cover lapse and a claim arrives about last year's work, there is no policy to respond — the old one has expired and no new one exists. A gap of even a month can erase protection for everything you've ever done.
- Notify early. Circumstances that might become a claim should be notified to your current insurer as soon as you're aware of them; wait until after renewal and the new insurer may exclude them as known issues.
- Switching insurers needs care. Moving to a new insurer is fine — provided the new policy's retroactive date preserves your history.
Retroactive dates and run-off cover
Two pieces of PI vocabulary worth knowing:
- Retroactive date. The policy covers claims arising from work performed on or after this date. When you first buy PI it's usually the policy start date, and each renewal should carry it forward unchanged. If a new policy resets the retroactive date to today, all your past work falls outside cover — a detail worth checking on every renewal and every insurer switch.
- Run-off cover. When you close, sell or retire from the business, claims can still arrive years later about past work. Run-off cover keeps a claims-made policy alive for that tail period without you writing new business. Professional bodies often expect a run-off period; several years is common practice, and your body may specify a minimum.
Who requires PI in Singapore
PI is not compulsory under general law, but two forces make it effectively mandatory for many firms:
- Professional bodies and regulators. Practising requirements in fields such as law, accountancy, medicine, real estate and fund management commonly include minimum PI cover. Check your body's current rules — limits and terms are specific and change over time.
- Client contracts. Corporate and government engagements routinely require vendors — especially consultancies, IT firms, designers and engineers — to hold PI at stated limits, with certificates produced before work starts or payment flows.
| Type of business | Typical trigger | Who usually requires it |
|---|---|---|
| Consultancies and advisory firms | Advice a client relied on and says caused financial loss | Corporate and government clients, through the contract |
| IT, software and digital agencies | A project failure, a missed specification, or an error in handling client data | Client contracts, particularly enterprise and public sector engagements |
| Architects, engineers and designers | A design or specification error found during or after the works | Clients and main contractors, through the appointment |
| Accountants and corporate service providers | Errors in accounts, filings or tax work | Commonly required by the relevant professional body — confirm its current rules |
| Law practices | Alleged negligence in advice or in the conduct of a matter | Commonly required as a condition of practice — confirm with the relevant body |
| Real estate agencies and fund managers | Advice, valuation or handling errors | Commonly required by the relevant regulator or body — confirm current requirements |
| Medical and healthcare practices | A treatment-related claim, usually written on a specialist medical indemnity form rather than general PI | Commonly required by the relevant body, and by hospitals granting privileges |
Professional-body requirements change and differ by field — treat the column above as the usual pattern and confirm the current limit and terms with your own body or regulator.
Indicative pricing for small firms starts from around S$300–800 a year, rising with fees, profession risk and limit. Actual premiums depend on your business — get a quote rather than budgeting from a range.
Frequently asked questions
What is professional indemnity insurance?
Professional indemnity insurance covers the compensation and legal costs you owe when a client suffers financial loss because of negligence, errors or omissions in your professional services. It protects businesses that sell advice, designs or expertise — the professional-work counterpart to public liability's cover for physical accidents.
What does claims-made mean in professional indemnity?
Claims-made means the policy that pays is the one in force when the claim is made against you, not when the work was done. This makes unbroken continuity of cover essential: a lapse leaves all your past work unprotected, because the expired policy no longer exists to respond and a future one won't cover claims made during the gap.
What is a retroactive date in a PI policy?
The retroactive date is the earliest date of work the policy will cover — claims arising from services performed before it are excluded. It's normally set when you first buy PI and should be preserved at every renewal and insurer switch; a reset retroactive date silently strips cover from everything you did before it.
Is professional indemnity insurance mandatory in Singapore?
Not under general law, but professional bodies in fields such as law, accountancy, medicine, real estate and fund management commonly require it as a condition of practising, and many client contracts demand it at specified limits. Check your professional body's current requirements and your contract wordings.
How much does professional indemnity insurance cost in Singapore?
Indicatively from around S$300–800 a year for small firms, rising with your fee income, profession's risk profile and chosen limit of indemnity. Actual premiums depend on your business — get quotes on your real numbers before budgeting.
Do I need PI insurance after I close my business?
You may still face claims about past work after closing, and because PI is claims-made, your expired policy won't respond — that's what run-off cover is for. Run-off keeps the policy alive for a tail period after you stop trading; professional bodies often expect several years of it.
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