Contracts & tenders
Reading the Professional Indemnity clause in a client contract
What to check in a client's standard contract before you sign, so its insurance clause actually matches what your policy provides.
Key takeaways
- ✓A contract's insurance clause is a promise about what cover you'll maintain — check it matches your actual policy before signing, not after a claim
- ✓Watch for liability caps, indemnity and hold-harmless wording that goes beyond your ordinary professional duty of care — this can fall outside standard PI cover
- ✓Confirm the contract's governing law and dispute-resolution clause is consistent with your policy's jurisdiction terms
- ✓If a contract requires a specific limit, a period of post-completion run-off cover, or that the client be named as an interested party, confirm feasibility with your insurer before signing
The most commonly missed clauses
A handful of clauses cause the most trouble in practice:
- A minimum limit of indemnity required to be maintained
- A requirement to maintain cover for a defined period after the contract ends — a de facto run-off requirement
- A requirement to notify the client of any lapse or material change in your cover
- Broad indemnity or liability wording that exceeds your ordinary professional duty of care
Why broad indemnity clauses are a problem
A PI policy generally responds to your legal liability for negligence — not to liability you've contractually assumed beyond that. Signing a broad indemnity clause can create a gap between what you've promised the client and what your insurer will actually pay. See our liability caps guide for how this plays out in practice.
Aligning contract terms with your policy
Compare the contract's required limit against your actual limit, check its governing law and jurisdiction clause against your policy's jurisdiction terms, and flag any post-termination cover requirement to your broker before signing, not after.
When to push back
It's entirely reasonable to negotiate a contract clause your insurer has confirmed it cannot support — an unusually long run-off requirement, or a liability cap set above your actual limit — rather than signing and hoping it never becomes relevant.
FAQ
Frequently asked questions
No — if a claim arises and your policy doesn't match what you contractually promised, you may be personally exposed for the difference.