How much professional indemnity insurance you need is answered in three places, in order: the client contract, your professional body's minimum, and an honest estimate of what a client could lose if your work went wrong. The first two are facts and the third is judgement.
Start with the contract
Most corporate and public sector engagements state a figure, and it is a minimum rather than an assessment of your risk. Read it before quoting, because agreeing to a limit you do not hold is a promise you cannot keep and raising cover after signing is rarely graceful.
Then the professional body
Regulated professions set a floor, often linked to fee income. Where both a contract and a body apply, you need whichever is higher, and the body's requirement usually applies to all your work rather than to one engagement.
Then what a client could lose
Size it against the consequence of your work being wrong rather than against the fee. A short engagement can lead to a large decision. Then check whether defence costs sit inside or outside the limit, because inside means every pound spent defending reduces what is left to settle.
Questions people ask about how much professional indemnity insurance do i need
Is the contract figure the right limit?
It is the minimum the client will accept, not an assessment of your risk. Many businesses sensibly buy above it.
What if my professional body sets a floor?
You need whichever is higher, and the body's requirement usually applies across all your work rather than to one engagement.
Do defence costs come out of the limit?
On many wordings yes. Where they do, the limit buys less than it appears to on a contested claim.