How to choose a limit of indemnity

Start with your largest realistic exposure — usually your biggest single project, contract or client relationship. Your limit of indemnity should comfortably cover a claim of that size, plus associated legal defence costs.

Check whether any regulator, professional body or client contract specifies a minimum limit. Many tenders and appointment letters set a floor that overrides your own risk assessment.

Understand whether your limit applies per claim or in aggregate across the policy period. An aggregate limit that looks generous can be eroded quickly if you face multiple claims in one year.

Revisit your limit periodically as your business grows — a limit that was adequate three years ago may no longer reflect your current contract values.