Professional indemnity insurance in Singapore protects a business that gives advice, designs, reports or other skilled services against claims that its work was negligent, wrong or incomplete and caused a client financial loss. A typical policy pays the cost of defending the claim and any damages or approved settlement, up to the policy limit and after the deductible. Without it, the company pays every dollar of legal costs and compensation from its own funds, often years after the work was done, and a single large claim can be enough to make a small firm insolvent.
What does professional indemnity insurance actually cover?
Professional indemnity (PI) insurance, sometimes called errors and omissions cover, responds to claims by clients or other third parties who say they lost money because of how you performed your professional services. Wordings differ, but most policies are built around the same core:
- Negligence and breach of professional duty: advice, designs, calculations, reports or recommendations that fall below the standard of a reasonably competent practitioner in your field.
- Errors and omissions: a missed deadline, a wrong figure in a report, a step left out of an implementation, a document filed late.
- Defence costs: lawyers’ fees, expert reports and court costs incurred with the insurer’s consent, whether or not the claim succeeds.
- Damages and settlements: compensation ordered by a court or arbitrator, or a settlement the insurer has agreed to.
- Common extensions: many policies add cover for unintentional infringement of intellectual property, unintentional defamation, loss of client documents and, sometimes, dishonest acts of employees.
PI is different from public liability insurance (injury to people or damage to property at your premises or worksites), from cyber insurance (your own systems being attacked) and from directors’ and officers’ insurance (claims against individual directors for management decisions). Our guide to D&O liability insurance explains how that cover sits alongside PI.
Which businesses need PI insurance?
Any business whose product is advice, expertise or skilled work done for someone else carries a PI exposure. Some licensed professions, such as lawyers, accounting firms, estate agencies, licensed financial advisers and insurance brokers, must hold it by law; we cover those rules in our guide to compulsory professional indemnity insurance in Singapore. For everyone else it is usually a commercial decision, often forced by a client contract or tender.
| Type of business | How a claim typically arises | Who might claim |
|---|---|---|
| Management or business consultant | A recommended restructuring, pricing model or market entry plan causes losses | The client company |
| IT, software or systems integrator | A configuration error, failed migration or system outage disrupts the client’s business | The client, sometimes its customers |
| Engineer, architect or designer | A design defect requires rectification works or delays a project | The developer, main contractor or later owners |
| Accountant, bookkeeper or tax agent | Wrong figures, a missed filing or poor tax advice leads to penalties or bad decisions | The client company, sometimes lenders or investors who relied on the figures |
| Marketing, media or creative agency | Campaign material infringes someone’s rights or a campaign error wastes the client’s budget | The client or a rights owner |
| Recruitment, HR or payroll provider | Wrong payroll or CPF calculations, or a poorly vetted placement | The client employer |
A two-person consultancy can be sued for the full loss its advice allegedly caused, which may be many times its fee.
What does an uninsured company risk when a client claims?
When a client says your work caused its loss, it can sue the company in contract (for breach of the implied term to use reasonable care and skill) and in negligence. Our article on professional negligence claims explains what a claimant must prove. From the defending company’s side, the exposure has several layers:
- Damages: the client’s provable loss, which may include rectification costs, lost profits and wasted expenditure, not just a refund of your fee.
- Your own defence costs: lawyers, independent expert evidence and management time, payable even if you win.
- The other side’s costs: a losing party is usually ordered to pay part of the winner’s legal costs, and sometimes more where a contract says so or a reasonable settlement offer was refused.
- A long tail: under the Limitation Act 1959, contract and tort claims generally have 6 years, but negligence claims for hidden damage can be brought within 3 years of the claimant discovering the problem, subject to a 15-year longstop. A project you finished in 2020 can still produce a claim in 2028.
- Insolvency: a company that cannot pay a judgment can face a statutory demand and a winding up application.
The company’s separate legal personality usually protects directors and shareholders from paying the company’s judgment debts. That protection is not absolute. An individual professional can sometimes be sued personally where he or she personally assumed responsibility to the client, and directors who let an insolvent company keep trading or give personal guarantees face their own risks. PI policies typically name the company and its principals and employees as insured persons, which is one reason they matter to the people behind the company as well.
How does a PI policy respond when a claim arrives?
Most PI policies are written on a claims-made basis: the policy that responds is the one in force when the claim is first made and notified, not when you did the work.
| Policy feature | What it means | What to check in your wording |
|---|---|---|
| Claims-made trigger | Cover depends on a policy being in force when the claim is made | Keep cover continuous; if you stop, ask about run-off cover |
| Retroactive date | Work done before this date may not be covered | Whether it reaches back to the start of your practice |
| Notification of circumstances | You can notify a situation that may give rise to a claim, locking it into the current policy | The time limit and what counts as a circumstance |
| No admission clause | You must not admit liability, offer refunds or settle without the insurer’s consent | Whether a goodwill credit or fee waiver counts as an admission |
| Limit of indemnity | The maximum the insurer pays, per claim and often in the aggregate for the year | Whether defence costs are inside or in addition to the limit |
| Deductible (excess) | The amount you pay on each claim before the insurer pays | Whether it applies to defence costs as well as damages |
| Territory and jurisdiction | Where the work is done and where claims may be brought | Exclusions for US or Canadian claims if you have overseas clients |
Tell your insurer or broker promptly about any complaint, demand letter or situation that could become a claim, and do not admit fault, waive fees or promise compensation until the insurer agrees. Late notification and unauthorised admissions commonly lead to disputed claims. If a claim is declined, our guide on disputing a rejected insurance claim explains the next steps.
What does PI insurance usually not cover?
A PI policy is not a guarantee that every loss connected with your work will be paid. Typical exclusions and limits include:
- Fraud and dishonesty of the principals. Even the Law Society of Singapore’s compulsory scheme for lawyers excludes losses caused by the fraud or dishonesty of a sole proprietor, partner or director.
- Liability you accepted by contract beyond what you would owe at law, such as an uncapped indemnity or a promise of a guaranteed result. Our guide to contracts that require PI insurance covers how to align contract terms with cover.
- Known claims and circumstances that you were aware of before the policy started but did not disclose.
- Fines and penalties, and anything that cannot lawfully be insured.
- Bodily injury and property damage, which normally belong under public or product liability cover, with some exceptions for design professionals.
- Cyber incidents affecting your own systems, which belong under a separate cyber policy.
- Fee disputes where the client simply refuses to pay you.
Insurance also does not remove legal liability. If the claim exceeds your limit, or falls within an exclusion, the company still owes the balance.
Example: an IT consultancy and a failed migration
Example: A Singapore IT consultancy with eight staff migrates a retail client’s online store to a new platform for a fee of S$60,000. A configuration error leaves the checkout failing intermittently for two weeks during a sale period. The client’s lawyers send a letter claiming lost sales, overtime and the cost of a replacement vendor, in a sum far larger than the fee. The consultancy’s director wants to keep the client happy and drafts an email offering to refund the fee and “cover any losses”.
If the consultancy holds PI insurance, the right move is to stop that email, notify the insurer immediately with the letter and project file, and let the insurer appoint or approve lawyers. The insurer may fund an expert to assess whether the error was negligent and what loss it actually caused, and may negotiate a settlement within the limit. The consultancy pays its deductible. If the consultancy has no PI cover, it funds the lawyers and expert itself, decides alone whether to settle, and pays any judgment from its own reserves. Our guide to responding when a client says your work caused its loss walks through those first steps in detail.
What happened when professionals had to accept responsibility?
Recent reported matters show how quickly a professional error turns into a financial liability, even for large and well-resourced firms.
- Deloitte Australia, 2025. As reported by The Register and other international media in October 2025, Deloitte Australia agreed to repay the final instalment of a contract worth about A$440,000 with Australia’s Department of Employment and Workplace Relations, after a report it prepared was found to contain non-existent academic references and a fabricated quotation attributed to a Federal Court judgment. A corrected version disclosed that a generative AI tool had been used. Later reporting of Senate Estimates hearings put the refund at almost A$98,000. Errors in deliverables, including AI-assisted work, can cost fees and reputation even where the client accepts the core findings.
- Razer v Capgemini, Singapore, 2022. In its published judgment ([2022] SGHC 310), the High Court found that IT consultant Capgemini Singapore breached its contract and was negligent when an engineer’s change to a server configuration allowed unauthenticated access to a Razer system, exposing customer order information. The court awarded Razer about US$6.5 million, mostly lost profits, plus forensic and investigation costs.
Neither report says whether, or how far, insurance responded, and we do not suggest otherwise. For a deeper look at court cases involving auditors, consultants and IT firms, see our review of professional negligence cases in Singapore and the news.
Checklist: before you buy or renew PI cover
- List the services you actually provide, including any new AI-assisted, cross-border or advisory work, and make sure the proposal form describes them accurately.
- Check whether any law, licence or regulator requires a minimum level of cover for your profession.
- Collect every client contract and tender that sets an insurance requirement, a liability cap or an indemnity.
- Choose a limit that reflects your largest realistic claim, not just your average fee.
- Confirm the retroactive date covers your past work, and keep cover continuous.
- Read the exclusions, the deductible and whether defence costs erode the limit.
- Disclose every known complaint or potential claim before inception.
- Set an internal rule that any complaint or demand is escalated to a director and notified to the insurer before anyone replies.
Frequently asked questions
Is professional indemnity insurance compulsory in Singapore?
Only for certain regulated professions and licences, such as lawyers, accounting firms, estate agencies, licensed financial advisers and registered insurance brokers. For most consultants and service companies it is voluntary by law, but client contracts and tenders frequently require it.
Does PI insurance cover a claim about work done before I bought the policy?
Only if the work falls after the policy’s retroactive date and you did not already know of the problem when you took out cover. Many policies set the retroactive date at the start of continuous cover, so gaps in cover can leave older work uninsured.
Can I apologise to an unhappy client?
You can acknowledge the complaint and say you are looking into it. Avoid admitting fault, waiving fees or offering compensation until your insurer agrees, because most policies treat that as a breach of the no admission condition.
Does PI insurance protect me personally as a director?
PI policies usually cover the company and its principals and employees for claims about their professional work. Claims about how you managed the company, for example from shareholders or a liquidator, are generally a matter for D&O insurance instead.
Insurance cover itself should be arranged through a licensed insurer or an insurance broker regulated by MAS.
Official sources: Razer (Asia-Pacific) Pte Ltd v Capgemini Singapore Pte Ltd [2022] SGHC 310; Razer v Capgemini costs decision [2023] SGHC 195; Limitation Act 1959.
Need help with a professional liability claim?
If your company, or you as a director or shareholder, is dealing with a client complaint, a demand letter or a claim that your professional work caused loss, contact the Raffles Corporate Services team at [email protected] or on WhatsApp at +65 8501 7133 or +65 9018 0072. We will help you understand the documents and deadlines. Where your matter needs a lawyer, for example if a claim is made against your company or you are sued, we will refer you to a firm on our panel of Singapore law firms that regularly handles professional negligence and liability disputes. Raffles Corporate Services is a corporate services provider, not a law firm or insurer, and this article is general information, not legal or insurance advice.
The Raffles Corporate Services Editorial Team, Raffles Corporate Services