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PROFESSIONAL INDEMNITY THAT PROTECTS YOUR DESIGN & ADVICE
Why Professional Indemnity Matters in Engineering & Manufacturing
In engineering and manufacturing, mistakes aren’t always “physical damage” events. A minor error in a drawing, tolerance, calculation, material selection, specification, safety assessment, or technical advice can lead to expensive rectification, project delays, loss of production, rejected batches, contractual disputes, and claims for financial loss. Professional Indemnity Insurance (PI) is designed to respond to claims alleging you have been negligent in your professional services — including design, specification, consultancy, or certification — and the claimant has suffered a loss as a result.
Professional Indemnity Insurance (PI) for Design, Specification & Advice
Professional Indemnity Insurance protects your business if a client (or third party) alleges that your professional services caused them a financial loss. In engineering and manufacturing, “professional services” often include design and development, calculations, drawings, tolerances, specifications, engineering advice, feasibility assessments, surveys, testing, inspection, certification, technical sign-off, and project management activities.
PI is especially important where your contracts include obligations around fitness for purpose, performance criteria, standards compliance, or where you supply bespoke designs or provide consultancy alongside manufacture. Even where you have excellent quality control, disputes can arise from misunderstandings, documentation gaps, changing client requirements, or integration issues with other contractors and systems.
Insure24 arranges PI cover tailored for engineering and manufacturing businesses — including firms that primarily “make” but also “design and advise”. We help structure the policy to match the services you actually provide, your contract terms, and your risk profile.
- Engineering design & drawings – CAD, technical drawings, calculations, and design sign-off.
- Specification & material selection – tolerance, component selection, BOMs, and compliance requirements.
- Technical advice & consultancy – guidance to clients on engineering solutions, performance and safety.
- Testing, inspection & certification – procedures, reporting, verification, and quality documentation.
- Project & integration support – design support and advice during installation, commissioning, or integration.
- Contractual requirements – many customers require PI as part of tendering and supplier onboarding.
What Does Professional Indemnity Insurance Cover?
Professional Indemnity Insurance is intended to protect your business against claims alleging you breached a professional duty and caused a financial loss. A well-structured PI policy typically covers the legal costs of defending the claim and any compensation you are legally liable to pay (subject to the policy terms). For engineering and manufacturing, this may relate to errors in design, specification, advice, reporting, or project work.
PI differs from Public Liability and Products Liability. Liability policies generally respond to injury or property damage. PI is for professional negligence and financial loss, which is common in design-driven and contract-led projects. Many engineering disputes involve a mix of issues: performance shortfalls, rework costs, delays, and contractual arguments about what was specified and delivered. Insure24 helps you choose PI cover that aligns with your actual service scope and contract wording.
Typical PI Claims in Engineering & Manufacturing
- Design error leading to rework, redesign, and delayed delivery timelines.
- Incorrect specification causing an unsuitable component/material selection or performance issue.
- Faulty calculation/tolerance resulting in parts that do not fit, align, or perform as intended.
- Advice dispute where a client relied on guidance and suffered measurable financial loss.
- Testing/reporting allegations where a report is claimed to be inaccurate or misleading.
- Project management / documentation gaps leading to scope disputes and added costs.
What Costs Can PI Help With?
- Legal defence costs including solicitors, counsel, and expert witnesses (subject to terms).
- Damages/compensation you are legally liable to pay for covered claims.
- Negotiation/settlement support and dispute resolution costs where applicable.
- Mitigation steps to reduce losses (policy dependent; must be agreed with insurers).
- Reputational support may be available in some PI wordings as an add-on.
Professional Indemnity policies are typically written on a “claims-made” basis, meaning the policy in force when a claim is made (and notified) is the one that responds, not necessarily the policy in force when the work was done. This makes continuity of cover and correct retroactive date arrangements important — especially for businesses that provide design or advice across long projects or have products with long operating lifecycles.
PI Limits, Contract Requirements & Common Exclusions
Engineering clients often request Professional Indemnity limits as part of supplier onboarding, tender submissions, and contract award conditions. Limits vary depending on the type of work, contract value, and the severity of potential losses. For example, a design error on a safety-critical system or a production-critical machine can lead to substantial financial claims, especially where downtime, delays, or replacement programmes are involved.
PI wording and endorsements matter as much as the headline limit. Some contracts include onerous terms around fitness for purpose, guarantees, and liability caps. Where possible, Insure24 helps you align cover to the reality of the work you perform and the obligations you accept.
Choosing the Right Limit
- Contract value – higher contract values often drive higher PI limits.
- Worst-case loss – consider downstream costs if your error causes delay or rework.
- Customer requirements – many ask for £1m, £2m, £5m or higher.
- Nature of design – bespoke, safety-critical, or regulated work can increase limit needs.
- Export exposure – overseas jurisdictions can increase claim severity and costs.
Common Exclusions to Review
- Fitness for purpose – may be excluded or restricted unless specifically covered.
- Contractual liability – liabilities assumed beyond common law may be excluded.
- Guarantees / warranties – purely contractual performance guarantees can be restricted.
- Known circumstances – issues known before inception must be disclosed and may be excluded.
- Fines and penalties – generally not covered; always check contract wording.
If your contracts are particularly demanding, we recommend you share the relevant insurance clauses. Small wording changes can make a big difference at claim time. Where appropriate, PI can be combined with other covers such as Products Liability, Contract Works / Installation, and Cyber — to create a joined-up risk framework that matches modern engineering operations.
“One specification change created a costly dispute over performance and delays. Having Professional Indemnity in place gave us expert defence support and protected our business while the matter was resolved.”
Director, UK Engineering & Manufacturing BusinessHow Much Does Professional Indemnity Insurance Cost?
PI premiums vary based on your turnover, the nature of professional services you provide, your claims history, and the risk profile of your contracts. Insurers also consider the type of engineering (e.g., process equipment, automation, structural components, safety-critical systems), the extent of bespoke design, and the quality controls you have in place. If you export or work under non-standard contract terms, this can influence pricing and insurer appetite.
Competitive pricing is often achieved by presenting your risk clearly: what services you provide, who you provide them to, how work is checked and approved, and how you manage change control and documentation. Insure24 helps you position your business to insurers in a way that supports strong terms — without compromising on the cover you need.
Risk Management That Helps Reduce Claims
- Documented design reviews – peer checks, sign-off stages, and traceable approvals.
- Change control – record specification changes, scope changes, and customer approvals.
- Clear statements of work – define what is included/excluded and assumptions used.
- QA & traceability – maintain evidence of testing, inspection, calibration and compliance.
- Contract review – identify fitness for purpose, liability caps, and onerous terms early.
- Handover documentation – O&M manuals, drawings, tolerances, and limitations of use.
What Insurers Typically Want To Know
- Description of services – design, specification, consultancy, testing, certification, etc.
- Project values – typical and maximum contract values.
- Industry sectors – where your clients operate and how critical your deliverables are.
- Experience – years trading and qualifications of key staff.
- Claims history – past allegations, disputes, or notifications.
- Contract terms – liability caps, warranties, fitness for purpose, and export jurisdictions.
PROTECT YOUR BUSINESS
- Claims alleging negligent design, specification, advice, or reporting
- Legal defence costs and expert witness support (subject to policy terms)
- Financial loss claims and damages you are legally liable to pay
- Contract-driven PI requirements to support tendering and onboarding
- Continuity of cover for long projects and long-tail exposures
- A structured approach aligned to your services and contract obligations
FREQUENTLY ASKED QUESTIONS
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What is Professional Indemnity Insurance for engineering businesses?
Professional Indemnity (PI) Insurance protects your business if you are accused of negligence in professional services such as design, specification,
calculations, advice, testing, inspection, or certification, and the claimant alleges they suffered a financial loss as a result.
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Is PI different from Public Liability or Products Liability?
Yes. Public and Products Liability generally relate to injury or property damage. PI focuses on professional negligence and financial loss arising from
errors, omissions, or advice. Many engineering disputes involve financial losses such as rework, delay costs, and performance disputes.
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Do manufacturers need PI if they also design machinery?
Often, yes. If you provide design, drawings, calculations, specifications, or technical advice as part of a manufactured supply, you can face allegations
of professional negligence even if the physical manufacturing is sound. PI helps protect you against those claims.
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What limit of indemnity do I need?
It depends on your contracts, project values, and potential worst-case losses. Many clients require £1m, £2m, or £5m, but higher limits can be needed
for large projects, export risks, or safety-critical work. We can help you choose a limit aligned to your exposures and contract requirements.
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Does PI cover rectification or rework costs?
PI primarily covers legal defence costs and damages you are legally liable to pay, subject to policy terms. Some policies can include limited mitigation
costs where agreed with insurers, but pure “making good” or contractual rectification can be restricted. The wording matters, so it’s important to structure
cover around how you deliver projects.
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What does “claims-made” mean for PI policies?
Claims-made means the policy in force when a claim is made and notified is the policy that responds (subject to retroactive date and other terms).
Continuity of cover and correct disclosure of circumstances are important, particularly for long projects or long-tail exposures.
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Can PI be arranged to meet contract wording requirements?
Often yes, subject to insurer agreement. If you share the insurance clause or tender requirements, we can aim to align limits, territories, and key
endorsements where feasible, and highlight any gaps created by onerous terms like fitness for purpose.
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What information do you need to quote PI?
Typically: turnover, a clear description of professional services (design/spec/advice/testing), maximum contract value, sectors served, export territories,
experience/qualifications, quality controls and sign-off processes, and claims/notifications history. Sharing key contract terms helps align cover.