What professional liability cover pays for, and when a claim can still come

Professional liability cover, also called professional indemnity, is meant to pay legal costs and damages when a client says your advice, design or service caused them a financial loss. It does not pay for injury to people or damage to property. The policy wording sets what is covered, for which period, and up to what limit.

What is professional liability cover for?

It is for a particular kind of claim: a client says that what you did, or did not do, in the course of your paid work cost them money. Typical examples are an error in a report, wrong advice, a missed deadline, a design flaw or a mistake in a calculation. The loss is financial, not physical.

On the professional liability hub, the people it suits are those paid for expertise: consultants, accountants and bookkeepers, engineers, architects, IT and software firms, financial advisers, allied health practitioners and creative agencies. Olvian does not tell you whether you need it. For some trades a rule or a contract may require it, which is the subject of who must have professional indemnity cover.

What does it usually pay?

Two things, as the hub describes it:

1. The costs of dealing with the claim. This normally includes legal costs of defending it.
2. Damages, if you are found liable or settle. Policies set conditions on settling, so the wording matters here.

Both are subject to the limit on the schedule and an excess. Rule 11.1 of the Policyholder Protection Rules (Short-term Insurance), 2017 treats any limit on the amount of cover as a "significant exclusion or limitation" that an insurer must disclose clearly, and Rule 11.3.1 requires communications about a policy to be in plain language and not misleading. If you cannot find your limit, or cannot tell what the wording excludes, ask the provider to point to the page.

What does it not pay?

It is not the cover for injury to people or damage to their property. That is public liability, a separate section. The hub's own example is a consultant: a visitor who trips in the office needs public liability, and a report that was wrong needs professional liability. Professional liability or public liability sets the two side by side.

It also does not replace other sections of a business policy, such as buildings, contents or business interruption. See what a business policy covers.

Exclusions differ. Typical areas to ask about are work outside your declared profession, work done before the retroactive date, and deliberate acts. The only reliable place to find them is your own wording.

What is the difference between claims-made and occurrence wording?

Liability policies are written in one of two broad ways, and the wording tells you which.

• Claims-made. The policy responds to a claim first made against you during the policy period (subject to its other conditions, such as the retroactive date).
• Occurrence. The policy responds to an incident that happens during the policy period, whenever the claim is later made.

Which one you have changes what you must do when you stop work, retire or move to another provider. Ask the provider two questions: "Is this claims-made or occurrence?" and "What happens to a claim made after this policy ends?" Ask for the answers in writing.

What is a retroactive date?

The hub explains that a policy only reaches back to work done before it began if it carries a retroactive date earlier than that work. That is usual when you move providers without a gap. If you have a gap, or you are new to the policy, the date may be later and work done before it may not be covered.

Tell the provider when you started trading and whether you held professional liability cover before. Keep the date from your old policy so you can show continuity.

Why does a claim sometimes arrive years after the work?

Because the time limit on a client's claim does not start on the day of the work.

Under section 11(d) of the Prescription Act 68 of 1969, the period of prescription is three years "in respect of any other debt", unless an Act of Parliament provides otherwise. But section 12(1) says prescription starts when the debt is due, and section 12(3) says a debt is not due until the creditor has knowledge of the identity of the debtor and of the facts from which the debt arises, with the creditor deemed to have the knowledge that reasonable care would have revealed.

For a professional error, a client may not discover the problem for a long time, and the clock starts when the facts are known or could have been known with reasonable care. This is general information about how the Act works, not a statement about any particular claim. An attorney can tell you what applies to your facts.

This is why claims-made wording and the retroactive date matter so much: a claim can arrive after the work, and sometimes after you have stopped working in that role.

What should I tell the provider?

Give the provider the details that matter for this kind of risk:

• your profession and what you actually do day to day;
• how long you have traded and your turnover;
• whether you held cover before and with what retroactive date;
• whether you have had a claim or a complaint, or know of a circumstance that might lead to one;
• whether a client contract, tender or professional rule asks for particular cover or a particular limit.

The reason to tell them all of it is simple: the policy is issued on what you say. See what insurers ask a small business.

What should I do if a client threatens a claim?

Treat a letter of demand, a complaint that mentions a loss, or a request that you "make it right" as something to report, not to settle quietly. Policies usually set conditions on notifying the insurer and on admitting fault or agreeing a settlement, and the wording is where those conditions live. Read the claims section of your policy now, before you need it, and ask the provider to say in writing how and to whom a circumstance or claim must be reported.

When you do claim, the Rules apply the same way as for any short-term claim. Rule 17.8.3 requires the insurer to tell you what information it needs, where and how to submit the claim, any time limits on submitting claims, any excess and any administrative fee. If the claim is refused, Rule 17.6.2 gives the insurer 10 days from its decision to tell you in writing, and Rule 17.6.3 requires reasons and at least 90 days for you to make representations. Business insurance claims and complaints explains the process in full.

How does Olvian fit in?

Olvian is a lead-referral service. You ask once, and the request goes to licensed providers who pay Olvian a fee and call you back. Olvian is not an insurer, broker or adviser, and it does not recommend what or how much cover to buy. The provider who calls you answers what suits your profession.

Sources

Checked on 31 October 2026. This guide is information, not advice.

• Policyholder Protection Rules (Short-term Insurance), 2017, Rule 11: Disclosure
• Rule 17: Claims management
• Prescription Act 68 of 1969, section 11: periods of prescription of debts
• Prescription Act 68 of 1969, section 12: when prescription begins to run