About Professional Indemnity Insurance for Solicitors

What is Professional Indemnity Insurance and why do solicitors need it?
PI insurance ensures that both you and your clients are financially protected in the event of mistakes or omissions being made by your Practice.  PI insurance is designed to meet the costs of defending claims and paying any damages. Indeed, Solicitors are not permitted to practice without PI insurance.

What cover do Solicitors need?

Primary cover
The mandatory minimum level of cover set by the Law Society required of each legal practice is £2,000,000 for Partnerships and £3,000,000 for LLPs or incorporated practices.

The Solicitors Regulatory Authority also dictate that cover must be underwritten by an approved insurer who abides by the minimum terms and conditions laid down by the Law Society.

Top up cover
The amount of cover you need and select will be dictated by a number of factors. These include:

• The size and demands of clients for whom you work
• The types of clients for whom you work
• The type of work you undertake

With this in mind, many firms choose to select cover in excess of the mandatory £2,000,000 limit.

How much will it cost?
The first £2,000,000 of cover is usually the most expensive.  The premium for top up cover is normally significantly lower per £1,000,000 than the first £2,000,000.

The actual cost of your cover will depend on a number of factors, these include:

• Your practice's claims history
• Your practice's level of fee income
• The type of work your practice conducts
• The number of principals and employees
• The amount of excess you choose i.e. the initial amount you, not the insurer, will pay in the event of a claim
• Your practice's risk management regime

Whilst it is the above factors that drive the cost of your premium, the amount your practice actually pays will depend on your broker's understanding of your business and ability to explore the market, particularly as different insurers will offer different rates.

How can Risk Management help to reduce Professional Indemnity costs?

The introduction and maintenance of a risk management regime can reduce a practice's exposure to potential claims and, in turn, reduce its Professional Indemnity premium.

Most of the issues relating to risk management are common sense and can be easy to implement.  Once implemented they must be followed - there is little point putting claims avoidance procedures in place if they are not fully adhered to. A demonstrable risk management program will be considered favourably by insurers.

To speak to us about an insurance solution for you, please contact us using the details on the right.