Exclusions are the situations your insurer will not pay for, and the eight worth checking first are prior acts, known circumstances, contractual liability, dishonesty, injury and property damage, cyber incidents, intellectual property disputes, and fines or penalties. Reading these before you sign, or before you renew, is the quickest way to avoid a declined claim. This guide walks through each one in plain language.
Plenty of business owners focus on the headline cover and never read the small print until something goes wrong. That is understandable, since policy wording is rarely a gripping read. Learn More about how this type of cover is structured, and the exclusions will make a lot more sense when you reach them.
Check eight exclusions: prior acts, known circumstances, contractual liability, dishonesty and fraud, bodily injury and property damage, cyber and data breaches, intellectual property, and fines or penalties. Read the wording, schedule and endorsements together, and ask your broker to explain anything that is vague.
What Is a Policy Exclusion?
A policy exclusion is a clause that removes certain events, activities or losses from cover. A professional liability insurance policy, known as professional indemnity in many markets, may look generous on the front page, yet its exclusions decide what actually gets paid when a client makes a claim.
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Why Exclusions Matter More Than the Headline Cover
Most professional indemnity insurance for businesses is written on a claims made basis, so the wording in force when the claim arrives is what counts. A single broad exclusion can quietly cancel the protection you thought you had.
This is where a broker earns their place, because reading wordings is part of the daily routine. A specialist such as MGG Insurance can compare clauses side by side, point out unusual restrictions, and explain what each one means for your type of work.
8 Exclusions to Check Carefully
1. Prior Acts and Retroactive Dates
Work done before the retroactive date is usually not covered, even if the claim arrives during the policy period. If you are changing insurers, ask for the retroactive date to be carried back so no gap opens up.
2. Known Circumstances and Prior Claims
Anything you already knew might lead to a claim, such as an angry client email or a mistake you spotted, generally has to be disclosed. Hiding it can let the insurer decline the claim later. Honest disclosure at the start protects you far better.
3. Contractual Liability and Guarantees
Clients sometimes write guarantees or wide indemnities into contracts. Policies often exclude liability you accepted by contract that you would not have had under the law. Show your standard contracts to your broker before you sign them, not after.
4. Dishonesty, Fraud and Criminal Acts
Deliberate wrongdoing is excluded for the person who committed it. What matters is whether the clause is severable, meaning an innocent partner or director is not penalised for someone else’s misconduct.
5. Bodily Injury and Property Damage
Professional cover deals with financial loss caused by advice or services. Physical injury and damage to property normally belong under public liability insurance. Consultants who visit client sites often need both, so check how the two policies fit together.
6. Cyber Incidents and Data Breaches
Many wordings limit or exclude losses from hacking, ransomware and data exposure. If you hold client data, ask exactly what is covered and whether a separate cyber policy is the better fit.
7. Intellectual Property Disputes
Claims over copyright, trademarks or patents are commonly restricted. Designers, marketers and software firms should check this one closely, since their deliverables are where such disputes tend to start.
8. Fines, Penalties and Regulatory Sanctions
Many policies do not pay fines or penalties, and in many places the law does not allow them to be insured. Look instead at whether the wording covers legal costs for responding to a regulatory investigation.
| Exclusion | What It Usually Means | Question to Ask |
| Prior acts | Work done before the retroactive date | What is the retroactive date, and can it go back further? |
| Known circumstances | Issues you knew about before the policy began | Have I disclosed everything that could become a claim? |
| Contractual liability | Duties you accept in a contract beyond the legal norm | Do client contracts ask for guarantees or wider indemnities? |
| Dishonesty and fraud | Deliberate wrongdoing by the person involved | Are innocent partners and directors still protected? |
| Injury and property damage | Physical harm or damage to belongings | Do I have separate public liability cover? |
| Cyber and data breach | Loss linked to hacking or data exposure | Is this limited, or does it need its own policy? |
| Intellectual property | Copyright, trademark or patent disputes | Does any cover apply to my deliverables? |
| Fines and penalties | Sanctions imposed by regulators or courts | Are defence costs for investigations included? |
How to Check Exclusions Before You Sign
Step 1. Ask for the full wording, schedule and every endorsement, not just a summary.
Step 2. Read the exclusions section first, then the definitions that those clauses rely on.
Step 3. Match each exclusion against the real work your business does, including any new services.
Step 4. Compare your current professional indemnity insurance policy with the quotation for renewal, line by line, to spot anything new.
Step 5. Ask your broker to confirm in writing how each unclear clause would apply in practice.
Frequently Asked Questions
1. What are exclusions in a professional indemnity policy?
Exclusions are situations the insurer has agreed not to cover. They sit in the policy wording and endorsements, and they decide whether a claim is paid or declined.
2. Does professional indemnity cover fraud or dishonest acts?
Usually not for the person who acted dishonestly. Some wordings still protect innocent partners or directors, so check how the dishonesty clause is written.
3. Is work done before I bought the policy covered?
Only if it falls after the retroactive date. Work completed before that date is typically excluded, which matters most when you switch insurers.
4. Does this cover include data breaches?
Often only in a limited form, or not at all. Many businesses need a separate cyber policy alongside, so confirm exactly what your wording says.
5. Where do I find the exclusions in my policy?
Look in the policy wording under a section called Exclusions, then read the schedule and every endorsement, since those can add or remove restrictions.
6. Can exclusions be changed or removed?
Sometimes. A broker can negotiate narrower wording or an endorsement with the insurer, though it depends on your profession, claims history and the insurer’s appetite.
Final Word
Exclusions are not there to trick you, but they do reward the people who read them. Knowing what sits outside your cover lets you fix the gap with better wording, an extra policy, or a tighter contract, long before a claim lands on your desk.
MGG Insurance helps business owners work through policy wording, question awkward clauses and match protection to how they actually trade. If a renewal is coming up, it is worth having an expert read it with you.
