What does professional indemnity insurance cover?
As a solicitor, your clients rely on your knowledge and integrity to get the best result for them. But what about when things don’t go to plan?
If you’re responsible for your own firm, professional indemnity insurance (PII) can protect your business against civil claims if you or your team’s practice is called into question.
Depending on your policy, this may include cover for fines or penalties imposed because of fraudulent behaviours, property damage, injury, and internal disputes.
Who needs professional indemnity insurance?
Under the Solicitors Regulation Authority (SRA) Indemnity Insurance Rules, practising solicitors must have qualifying PII. Any solicitor who owns or manages a firm has an obligation to ensure their business is insured.
PII is generally only required for private practice solicitors. Although occasionally it can apply to solicitors working in-house. You should speak to your employer if you are unsure whether you need to purchase cover.
How to get the right renewal cover for your firm
1. Start planning now
Deciding when to start renewing your PII policy is key. Start to plan for your renewal 8 to 12 weeks ahead, to provide enough time for a thorough review, data compilation, and to collect responses for unforeseen circumstances.
If you’re using a broker they should keep you up to date with market conditions, and how they’ll support you to secure a competitive renewal.
Try to agree deadlines with your broker around timeframes for proposal issue and production of renewal terms.
2. Collate the information you need
The proposal form is a key component for renewal. It helps the insurer to formulate a view of your risk.
It’s important to answer all questions fully, and to be open and honest with your responses, supplying as much information as possible.
Your claims history will play a vital role in the underwriter’s risk assessment. You will therefore need to present a detailed account of past claims, as well as any remedial work carried out to mitigate future risk.
3. Get alternative quotes
PII is usually purchased through a broker, and it can be hard to know who to approach.
A good broker should advocate for your best interests and provide ongoing support, especially in contentious scenarios. Try to set clear expectations about what you want and explain that you are willing to move insurer for the right policy.
While asking for more than one quote for insurance is good, making too many requests may deter insurers. To get a whole market response, try engaging with independent brokers, as well as those that offer bespoke schemes.
As policies must adhere to the SRA’s minimum terms, most brokers can get the information they need from the same proposal form that you provided to your current broker. So, you can save on the time and effort it would usually take filling in multiple forms.
Use a broker that knows your industry
At Wesleyan Financial Services we use our years of practice experience and legal knowledge to find a policy that’s tailored to the needs of your firm.
Every law firm is different, which is why when you take out PII with us, we'll take the time to understand your needs and negotiate with insurers to get the right cover for you.
We’re also on hand throughout the life of your policy to provide support and advice whenever you need it.
Wesleyan Financial Services Ltd is a broker and our insurance products are provided by a number of insurers.
4. Understand the rating factors
Insurers will consider several factors when providing quotes. These include:
Partner numbers: This will determine an insurer’s appetite. Some will specialise in smaller firms, made up of less than four partners. Others will concentrate on larger firms with more partners.
Fee income: Try to be as accurate as possible when declaring fee income. If there have been significant changes, provide the reasons for this with your presentation.
Areas of practice: Conveyancing and personal injury are classed as high-risk areas by insurers, whereas areas such as criminal and family are considered low risk. So, it’s important to accurately reflect your areas of practice, as this can impact your premium.
Claims: Insurers will want to see at least five years of confirmed claims before quotation. An insurer isn’t necessarily going to be turned off if you’ve made claims. They want to know the circumstances of the claim and the procedural changes you have made since, to prevent a recurrence.
Risk management: This should be embedded in the firm's culture. Accreditations such as Lexcel or CQS do not mean you will be eligible for lower PII premiums. But they do demonstrate that the firm is working towards a best practice standard.
5. Evaluate the offer
When evaluating the offer, consider whether the premium is competitive in comparison to market conditions and alternative quotes.
The main policies are similar in their conditions, but look closely at limits, excess and endorsements. Check there are no additional fees or charges included by the broker and don’t be afraid to ask questions.
Previously, firms were tied to 1st October as an annual renewal date. They now have the option to move the renewal to a more convenient time for them.
Some insurers are willing to offer extended period policies, so if it’s possible, consider whether an 18-month policy would work better for you, rather than a 12 month one.
Finally, think about how you will fund the premium. While it can be paid as one full payment, you may wish to explore the option of paying in instalments. This can be arranged through a financial lender recommended by the broker or through your own funding arrangements.