Worked Quotes and Buying Checklists
Professional indemnity and D&O insurance quotes in India: what to compare
How professional indemnity and directors and officers liability insurance work in India, how to compare quotes, and the Companies Act rule on D&O premiums.
Professional indemnity (PI) insurance pays claims for financial loss caused by negligent advice, design, services or errors in your professional work, which general liability policies exclude. Directors' and officers' (D&O) insurance protects individual directors and officers, and often the company, against claims alleging wrongful acts in managing the business. Both are almost always claims-made, so the retroactive date and continuity matter as much as the premium. When comparing quotes, line up the limit and whether defence costs sit inside it, the deductible (retention), the retroactive date, the definition of claim and insured, the major exclusions, and any sub-limits for regulatory investigations. Under section 197(13) of the Companies Act, 2013, a company's payment of D&O premium is not treated as remuneration of the director unless the director is proved guilty.
This guide is part of the liability insurance buying checklist. Figures are illustrative. The method is the same as in the worked quote comparison, and accurate answers matter just as much; see the proposal form guide.
Who needs which
| Business or role | Main risk | Policy |
|---|---|---|
| Consultants, IT services, engineers, architects | Client loss from negligent advice, design or delivery | PI, sometimes combined with cyber |
| Chartered accountants, company secretaries, lawyers | Errors in advice, filings or opinions | PI; professional bodies may have schemes or guidance |
| Doctors, clinics, hospitals | Medical negligence | Medical malpractice or professional indemnity for healthcare |
| Insurance brokers | Errors in placing cover | PI, which IRDAI requires brokers to hold |
| Companies with boards, investors or lenders | Claims against directors by shareholders, lenders, regulators, employees | D&O |
| Start-ups after a funding round | Investor or employee claims; term sheets often require D&O | D&O |
How PI cover works
- Insuring clause: pays damages and costs for claims arising from a breach of professional duty, negligent act, error or omission in your professional services
- Trigger: claims first made during the period, for work done after the retroactive date. See occurrence vs claims-made
- Typical exclusions: fraud and dishonesty (often with severability for innocent partners), known claims and circumstances, contractual penalties and liquidated damages, guarantees of results, bodily injury and property damage (covered by general liability), and fines
How D&O cover works
D&O policies usually have three insuring agreements:
| Side | Who it protects | When it pays |
|---|---|---|
| Side A | Directors and officers personally | When the company cannot or may not indemnify them |
| Side B | The company | Reimburses the company when it indemnifies its directors |
| Side C | The company itself | Securities or other claims against the company, depending on wording |
Common features to compare: cover for defence costs in regulatory or criminal investigations until a finding of guilt, cover for outside directorships, the definition of "insured person", cover for employment practices claims, and the "insured vs insured" exclusion that limits claims brought by the company against its own directors.
Comparing PI quotes: a worked example
An IT services firm (illustrative turnover ₹15 crore, mostly Indian clients, some UK) receives two PI quotes:
| Quote P | Quote Q | |
|---|---|---|
| Limit per claim and aggregate | ₹2 crore | ₹2 crore |
| Defence costs | Inside limit | In addition, up to ₹50 lakh |
| Retention (deductible) | ₹2,00,000 | ₹5,00,000 |
| Retroactive date | Full prior acts from first policy (2019) | Inception of new policy (2026) |
| Territory and jurisdiction | Worldwide excl. USA/Canada | India only |
| Premium before GST | ₹1,65,000 | ₹1,25,000 |
| With GST | ₹1,94,700 | ₹1,47,500 |
Quote Q is ₹47,200 cheaper, but:
- The retroactive date resets to 2026, so claims about work delivered between 2019 and 2026 would be excluded. For an IT firm with long-running projects, that is a major gap.
- India-only jurisdiction does not fit UK clients.
- The retention is ₹3 lakh higher.
Test a ₹1.2 crore claim, with ₹30 lakh defence costs, for work done in 2025:
- P: total ₹1.5 crore inside limit; insurer pays ₹1.5 crore − ₹2 lakh = ₹1.48 crore; firm pays ₹2 lakh. Total = ₹1,94,700 + ₹2,00,000 = ₹3,94,700
- Q: work predates retroactive date; insurer pays nothing; firm pays ₹1.5 crore. Total = ₹1,51,47,500
Unless Q can be amended to recognise the 2019 retroactive date and add UK jurisdiction, P is the only real option. Model your own claim with the quote comparison tool.
Comparing D&O quotes: what moves the price
- Listed or unlisted, and whether the company has US exposure
- Financial health, debt levels and recent losses
- Industry and regulatory exposure
- Recent or planned events such as fundraising, IPO, acquisitions or insolvency
- Limit and retention, especially for Side C (company) securities claims
Checklist for D&O quotes
- Is Side A cover available even if the company is insolvent?
- Are regulatory investigation costs covered, and is there a sub-limit?
- Does the policy cover past, present and future directors?
- Is there a severability clause so one director's fraud does not void cover for others?
- How does the policy handle claims brought by shareholders, lenders or insolvency professionals?
- Is a run-off (extended reporting) period available on change of control?
Tax and corporate points
- Section 197(13) of the Companies Act, 2013: D&O premium paid by the company is not part of director remuneration, unless the director is proved guilty
- GST at 18% applies to both PI and D&O premiums; a GST-registered company can usually take input tax credit if conditions are met. See GST on liability premiums
- SEBI LODR Regulation 25(10) requires the top 1,000 listed entities by market capitalisation to take D&O cover for independent directors, with the quantum and risks decided by the board; check the current text of the LODR Regulations
Frequently asked questions
Does PI insurance cover a client who simply refuses to pay my invoice?
No. Fee disputes are not professional negligence claims. Some wordings offer limited cover for fee recovery, but it is not the purpose of PI.
Can a company buy D&O for a single director?
Policies are bought by the company for all directors and officers as a class, rather than for one person.
Is PI cover compulsory?
Not generally, though some regulators and professional bodies require or encourage it, and many client contracts demand it.
Does D&O cover fines imposed by a regulator?
Usually not, where the law does not allow fines to be insured. It may cover defence costs in the investigation.
Sources
- Ministry of Corporate Affairs — Companies Act, 2013
- Securities and Exchange Board of India — LODR Regulations for listed entities
- IRDAI — registered insurers, brokers and broker regulations
