Policy mechanics
Understanding your Professional Indemnity excess
What an excess is, how insurers set it, and how it interacts with your limit of indemnity and premium.
Key takeaways
- ✓Your excess is the amount you pay toward each claim before your insurer's payment applies
- ✓Excess and limit of indemnity are set independently — a high limit can carry a modest excess, and vice versa
- ✓A higher excess typically lowers your premium, but should be sized against what your business could comfortably self-fund
- ✓Some policies apply a different excess to specific higher-risk activities within the same practice
What your excess actually pays for
Your excess applies per claim, not once per policy period. If you face two unrelated claims in the same year, your excess is typically payable on each one separately, not just the first.
On most policies, the excess applies to the combined cost of a claim — damages and legal defence costs together — rather than to damages alone. Whether defence costs erode your excess (and your limit) depends on your specific policy wording; see our guide to defence costs for the detail.
How insurers set your excess
For professions eligible for automated online rating, insurers typically apply a standard excess linked to your turnover band and chosen limit, with limited room to negotiate.
For refer-only professions — where a specialist underwriter prices your risk individually — excess is usually one of several negotiable terms, alongside limit, premium and any specific exclusions, based on your claims history, sector and contract profile.
Balancing excess against premium
Raising your excess is one of the more reliable ways to reduce premium, since it shifts a defined amount of risk from the insurer back to you. The trade-off only makes sense if you can comfortably self-fund that amount without disrupting your business.
A common mistake is choosing the highest available excess purely to minimise premium, without checking it against actual cash reserves. Size your excess against what you could pay out of working capital on short notice, not against what feels like an acceptable number in the abstract.
Can you choose your own excess?
Within the range an insurer offers, yes. Online rating tools usually present a small set of excess options tied to your profession and turnover. Refer-only submissions can often negotiate a bespoke excess as part of the underwriting conversation with your broker.
FAQ
Frequently asked questions
Per claim. If multiple separate claims arise during the same policy period, your excess is typically applied to each one individually.