Indemnity by definition simply means compensation for damage or loss.  Professional indemnity insurance protects you and your business against claims for alleged negligence or breach of duty arising from an act, error or omission in the performance of professional services.

Scope of Cover:

Professional indemnity insurance provides cover for claims brought against the policyholder due to their professional negligence

Types of Professional Indemnity: 
Negligent act, error or omission this indemnifies the policyholder against loss/circumstances incurred only as a result of their negligent act, error or omission in carrying out the policyholder's business. This is the narrowest form of cover

Breach of duty A typical PI policy will provide indemnity to the insured against loss arising from any claim or claims for breach of duty which may be made and reported to the insurers during the policy period by reason of any neglect, error or omissions committed in the conduct of the insured’s professional business. [1]

Civil liability Some PI policies go further than the standard cover and provide indemnity 'for any civil liability'. This covers such areas as breach of contract, libel and slander. (Some standard cover policies may also include libel and slander as extensions to the policy wordings if required.)