The type of service provided is the key determinant of whether Professional Indemnity Insurance required.
The test of when Professional Indemnity Insurance is required by a service provider does not turn directly on a particular description of the service provider's business. The criteria one should apply is found in the nature of the service, not the profession per se. What the service provider is doing for the Principal will determine the exposure and an assessment of the risk will identify the extent of professional indemnity insurance required.
To compound the service provided question, the insurance industry segments its liability insurance offerings into, in context, public liability, products liability and professional indemnity policies. Whether you are purchasing IT consultant insurance , management consultants insurance , recruiters insurance or bookkeepers insurance, the types of insurance required will differ depending on both the industry and the type of work the professional performs.
As general rules, the following distinctions can be used to test which policy should be required of a service providers.
Public liability and products liability insurances are primarily designed to address the personal injury or property damage that may arise from the service provider's activities. In other words they deal with the physical outcomes of faulty services.
Professional Indemnity Insurances are primarily designed to respond to the financial loss arising from faulty advice, design or specification by the service provider. The IT consultant or management consultant upon whose advice or design the Principal or the Principal's customers rely upon, is the Professional targeted by Professional Indemnity Insurance.

In the current environment a "professional" is a term that is not limited to a specific learned and skilled profession such as doctors and lawyers, it can also refer to one belonging to an occupation such as a trade ie. an electrical engineer provides advice in respect to electrical wiring, bodily injury or property damage could result if the wiring is incorrectly placed. A financial loss, could arise in the cost of replacing the electrical wiring.
To adequately distinguish if an exposure of a professional nature exists that would have the effect of causing a financial loss the exposures presented by each profession and/or occupation need to be assessed. Consideration should therefore be given to the following points:
(a) Is a Professional Indemnity Insurance policy required
A professional can be defined as: "A party who has acquired through learning, specialist knowledge and experience, and who professes to exercise those skills generally for a fee in giving advice in the affairs of others".
A professional must have some special skill or ability, or some special qualifications derived from training or experience.
Being deemed a Professional places the individual or company in a position where they owe their client or prospective client a duty of care.
The common law requires a professional to provide a reasonable standard of care to an appropriate level expected by their profession. As professionals are involved in activities requiring a specialist skill or knowledge, they must not only exercise reasonable care, but will also be judged on the standards appropriate to that activity.
If a Professional breaches his/her duty of care, whether in a profession or occupation, it must be determined whether the duty is owed in a professional capacity and whether a financial loss has resulted from the breach. This result would depend upon the circumstances giving rise to the situation which caused the breach, and the duty of care may be owed by a wide range of people depending on the work performed and its size, While there are many circumstances where it may be easy to determine whether or not a professional indemnity insurance policy is required, border line cases can and will arise. Whether or not professional indemnity insurance cover should be granted in such circumstances will depend on the experience, qualifications and/or skill held by the professional, the scope of the activities and whether any advice is provided and for what fee.
(b) Is a Professional Indemnity Insurance policy required - "What are the exposures presented by that particular Profession?" Each profession and/or occupation brings with it a different set of exposures and can experiance different types of claims. To adequately distinguish between risks, and whether a Professional Indemnity insurance policy is required, a clear picture of the exposures presented by each profession needs to be established. The exposures can be assessed by having the applicant submit details confirming a clear description of their activities and/or any advice provided in their profession and/or occupation.