The policy that responds when the damage is neither an impact nor a fire but a mistake: a calculation, a report, a design or a piece of advice that leaves the client with a purely financial loss.
Professional indemnity covers the financial loss that an error, omission or negligence in delivering a service causes the client. Its boundary with general liability is clear on paper and blurred in a claim: general liability answers for the physical damage the operation causes, while professional indemnity answers for the financial damage the technical judgement causes. A blowtorch that starts a fire on site is general liability; a miscalculated structure that has to be rebuilt is professional indemnity.
That distinction matters because pure financial loss — the kind with no accompanying material damage — is expressly excluded from almost every general liability policy. In other words: this is not an optional cover that reinforces the other one, but the only contract that answers for an entire category of loss the main policy leaves out by definition.
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Professional indemnity is best defined by what it is not. It does not answer for someone slipping in your office, nor for a machine of yours breaking something that belongs to another: general liability covers that. It answers for a calculation, a report, a drawing or a piece of advice turning out to be wrong and costing money to whoever relied on it.
That distinction — pure financial loss, with no material damage alongside it — is exactly the category general liability policies expressly exclude. Which is why the two covers do not overlap: each answers for what the other leaves out.
In this class the policy almost always operates on a claims made basis. What triggers cover is not when the error was made but when it is claimed, and years can pass between the two.
Article 73 of the Spanish Insurance Contract Act admits both ways of framing it, with a floor on each: extended reporting of not less than one year after the contract ends, or retroactivity of at least one year before inception. And it expressly classifies them as limitative clauses under its article 3, which requires them to be specially highlighted and specifically accepted in writing.
The breaking point is changing carrier. If the new policy starts with a retroactive date shorter than the real age of the work delivered, a gap opens that nobody notices until a claim arrives over a project from four years ago.
Law 2/2007 on professional companies settles the question in its article 11. Paragraph 2 provides that debts arising from professional acts properly so called are owed jointly and severally by the company and the professionals, partners or not, who acted. And paragraph 3 requires professional companies to take out insurance covering the liability they may incur in carrying on their corporate purpose.
The practical consequence is that a claimant may go after whichever estate they prefer. Whether the policy names partners and collaborators, and not only the registered company, stops being a detail of the wording and becomes the difference between being covered and not.
As a brokerage registered with the Spanish insurance regulator, the Dirección General de Seguros y Fondos de Pensiones, under reference J0140, New Brokers acts on the client's mandate, not on any insurer's behalf.
In professional indemnity the technical work concentrates on three points that rarely get looked at when comparing prices: the exact definition of the insured activity — which in technical services changes faster than the wording — the temporal join with the previous policy, and whether cover extends to the individuals as well as to the company. All three are negotiated before signing; none of them can be fixed afterwards.
The core section: the financial loss caused to the client by a failure in delivering the contracted service, with no need for material damage to occur.
The acts of your own staff and of external professionals working under your direction, whose conduct is attributed to you as against the client.
The cost of defending yourself from the first claim, including criminal proceedings arising from professional practice, and any bonds the court requires.
Assistance in disciplinary and ethics proceedings, which precede and often shape the civil claim that follows.
The cost of correcting the faulty deliverable where expressly agreed. It is not automatic: many policies cover the damage caused but not putting the work itself right.
Reconstructing the documentation entrusted to you in order to deliver the service, whether physical or digital.
Claims for improper use of third-party work or trade marks in the deliverable, common in engineering, architecture, design and software development.
Damage arising from statements made in reports, expert opinions or audits, where a technical assessment may harm a third party's reputation.
Liability attributed to you for calculations, studies or opinions commissioned from other professionals, without prejudice to recovery against them.
The temporal reach backwards and forwards. Under a claims made policy, it is the feature that decides whether a claim is admitted at all.
| Item | Statutory regime |
|---|---|
| Insurance for professional companies (art. 11.3, Law 2/2007) | They must take one out |
| Liability for professional acts (art. 11.2) | Joint and several: firm and acting professional |
| Extended reporting in claims made (art. 73 LCS) | Not less than one year |
| Retroactive date in claims made (art. 73 LCS) | At least one year before inception |
| Agents in the building process (art. 17 LOE) | 10 / 3 / 1 years from handover |
This table sets out the regime established by Law 2/2007 on professional companies, the Insurance Contract Act and the Spanish Building Act, not the terms of any particular policy. That the temporal delimitation clauses are limitative means they must be specially highlighted and specifically accepted in writing. In addition, many professions have their own insurance requirements under sector or professional-body rules that deserve checking case by case. Limits and deductibles are governed in every case by the specific conditions.
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Go to the client areaIn professional indemnity the exclusions do not separate activities, they separate the mistake from what was never uncertain.
Wilful misconduct and conduct deliberately contrary to professional standards, once established by a final judgment.
Claims and circumstances already known at inception and not disclosed in the proposal form.
Missed deadlines and agreed contractual penalties, which are commercial risk rather than technical error.
Guarantees of results and profitability estimates: the professional answers for diligence, not for success, unless success was expressly promised.
Bodily injury and property damage to third parties, which belong to the general liability policy.
A director's management decisions about the company, which are D&O territory.
Work carried out without the qualification, authorisation or professional registration required for that activity.
Facts predating the agreed retroactive date, which is the most delicate parameter when changing insurer.
An engineering firm undersizes a structural element. There is no collapse and no injury: what has been built must be demolished, rebuilt, and the delay absorbed towards the end client.
What it means
The loss is purely financial, so general liability does not respond. And the most disputed item is usually not the repair but the cost overrun and the delay, which depend on whether the policy covers only the damage caused or also the rectification of the defective work.
A consultancy delivered an opinion the client acted on. The loss surfaces years later, when the policy in force at the time of writing has already been replaced by another from a different carrier.
What it means
Operating on a claims made basis, the policy that responds — if any does — is the one in force when the claim arrives, and only if its retroactive date reaches back to the report. It is the classic gap left by a badly joined change of insurer.
The client sues both the company and the individual professional who signed the work, looking for whichever estate responds first.
What it means
Article 11.2 of Law 2/2007 makes them jointly and severally liable for debts arising from professional acts. Whether the policy names partners and collaborators, and not only the company, stops being a detail of the wording.
We describe what services you actually deliver, with what qualifications and in what territory. The declared activity is what is covered, and in technical services it changes faster than the wording does.
The limit is set not by turnover but by the value of the projects you work on and by the minimums your clients' contracts and tenders impose.
We check the retroactive date and the extended reporting period so no stretch is left uncovered between the old contract and the new one. This is where most claims are lost.
We take the risk to market comparing wording rather than premium alone, issue the certificates your clients require, and represent you before the insurer when a claim arrives.
It answers for the bodily injury and property damage that professional indemnity excludes. The boundary between the two is the most common argument in a technical services claim.
A technical error towards a client belongs to professional indemnity; a management decision harming the company or its creditors belongs to D&O.
Where a cyber incident affects the service you deliver, the line between cyber damage and professional error deserves to be written down.
Designers and site supervisors are also liable as agents in the building process, under the ten, three and one-year periods of the Building Act.
Serving clients in other countries submits the error to jurisdictions with very different standards of liability.
It depends on the legal form and the profession. Article 11.3 of Law 2/2007 requires professional companies to take out insurance covering the liability they may incur in carrying on the activity that constitutes their corporate purpose. Beyond that, many professions have their own requirements under sector or professional-body rules. And in practice it becomes compulsory by contract: tenders and large clients' framework agreements demand it with minimum limits.
The type of loss. General liability answers for bodily injury and property damage the activity causes third parties; professional indemnity, for the financial loss a technical error causes the client, with no physical damage necessarily involved. That pure financial loss is expressly excluded from almost every general liability policy, so the two do not overlap: each answers for what the other leaves out.
That what activates cover is the date of the claim, not the date of the error. Article 73 of the Insurance Contract Act admits two ways of delimiting it: extending cover to claims made for a period of not less than one year after the contract ends, or restricting it to claims made during the policy period provided it covers acts occurring at least one year earlier. Both are limitative clauses under article 3, so they must be specially highlighted and specifically accepted in writing.
That is the principal exposure in this class. The new policy will only respond to earlier errors if its retroactive date reaches them. If it starts with limited retroactivity, everything delivered before is left unprotected precisely while it can still be claimed. That is why the join between contracts is negotiated before cancelling the previous one, not afterwards.
Only where expressly bought. The core section answers for the loss the error causes the client, but putting the defective deliverable right is a separate concept and many policies exclude it. In sectors where the cost of redoing exceeds the indemnifiable damage — engineering and architecture above all — it is among the first things worth reviewing.
A description of the services you deliver and the team's qualifications, turnover by type of work and by client, any contracts or tenders imposing minimum limits, the claims history, and, if you have a current policy, its specific conditions with its retroactive date.
Professional indemnity (E&O) insurance covers the financial loss that an error or omission causes to the clients of an engineering, consulting or IT firm. Here is its scope and why it is claims-made.
Read→This information is for guidance only and is not binding. Covers, limits and exclusions are governed in all cases by the specific terms of each policy. New Brokers Correduría de Seguros, S.L., registered with the DGSFP under reference J0140.