Solicitors Professional Indemnity Insurance
Solicitors' professional indemnity is the most tightly prescribed class in the market. The SRA publishes Minimum Terms and Conditions that a policy must meet, and those terms are written to protect the client rather than the firm, which is why a solicitors' policy cannot be cut back in the ways other professions negotiate.
Conveyancing is a significant area of claims exposure for many firms. It produces a disproportionate share of notifications across the profession, and the proportion of a firm's income coming from property work is one of the most significant underwriting factors in what it pays and on how many insurers will look at it at all.
Holding client money creates a distinct financial crime and client-money exposure. A practice holding client money is a target for payment redirection fraud, and the loss falls on the firm because the client is entitled to their money regardless of who was deceived.
We can advise legal practices on cover meeting the SRA Minimum Terms, the six year run off obligation on closure, and the cyber and crime cover that sits outside the indemnity policy but answers the losses firms actually suffer.
Common claims and risk exposures
The exposures that produce claims in this trade, rather than a generic list.
Conveyancing
The largest single source of claims in the profession. Title defects, undisclosed rights, restrictive covenants, planning and building regulation matters, and searches not properly reported. A residential transaction generates a modest fee and a liability equal to the value of the property.
Missed limitation dates
A claim issued out of time cannot be repaired, and the loss is the whole value of the client's case. It is the most straightforward negligence claim there is, and it is entirely a matter of diary management.
Undertakings
An undertaking is binding and enforceable against the firm whether or not it was wise to give it. Undertakings given on completion, and those given to lenders, are enforced without much sympathy for how the situation arose.
Wills, probate and estate administration
Claims arrive from people who were not the client: disappointed beneficiaries, executors and family members. Drafting errors, failures of execution and tax planning missed in an estate surface years later, often after the fee earner has retired.
Client account and payment fraud
Fraudulent completion statements, redirected purchase monies and compromised email accounts. The firm has to make good the client account, which is why this exposure is managed with verification procedures rather than insurance alone.
The cover we arrange
We arrange professional indemnity and related insurance around the services you provide, the clients you work with and the contractual requirements you face. The appropriate cover and limits will depend on your individual activities and the terms available from insurers.
Professional indemnity on SRA Minimum Terms
The compulsory layer. The Minimum Terms fix the scope, prohibit most exclusions and require a minimum limit, currently higher for incorporated practices than for partnerships and sole practices.
- SRA Minimum Terms and Conditions
- Very limited permitted exclusions
- Minimum limit set by the SRA
- Participating insurers only
Excess layer cover
Cover above the compulsory limit, which many firms need because a single conveyancing or commercial matter can exceed the minimum comfortably. Written on terms following the primary layer.
- Above the compulsory minimum
- Sized to the largest transaction handled
- Follows the primary wording
- Often required by lender panels
Run off
The SRA requires run off cover for six years after a practice closes. It is expensive, it is not optional, and the cost of it is a reason firms plan a merger rather than a closure.
- Six years, required by the SRA
- Applies on closure or cessation
- Priced as a single premium
- Plan it before deciding to close
Cyber and crime
Payment redirection, email compromise and ransomware. The indemnity policy answers negligence, not theft of money by a third party, so this sits alongside rather than inside it.
- Payment redirection and social engineering
- Ransomware and restoration
- Data breach notification
- Business interruption
Office, employers and public liability
Premises, contents, files and injury cover for staff and clients attending the office. Employers' liability is legally required, and file reconstitution costs are worth checking on a practice holding deeds and originals.
- Premises, contents and files
- Deeds and documents
- Employers' liability, legally required
- Clients visiting the office
What an underwriter will ask
Having these to hand shortens the process considerably, and usually improves the terms.
- Fee income split by work type, with conveyancing stated separately
- Number of partners, solicitors and support staff, and the supervision structure
- Highest value transaction handled in the last year
- Whether the firm is on lender panels, and which
- Whether personal injury, financial mis selling or claims work is undertaken
- Procedures for verifying payment details and completion monies
- Diary and limitation date management systems
- Claims, circumstances and any SRA intervention over the last six years
What affects the cost of your insurance?
The main factors insurers consider when assessing the premium.
Conveyancing proportion
One of the main factors insurers consider. A firm with no property work is a different proposition from one where conveyancing is half of income, and the difference shows in both price and the number of insurers willing to quote.
Claims record
Rated over six years, and notified circumstances count. This class has a long memory, and one bad year affects renewals for several afterwards.
Supervision and file review
Documented supervision, file reviews and sign off procedures on high risk work are what an insurer is buying when it takes on a practice, and they are reflected in terms.
Practice structure
The SRA sets a higher compulsory minimum for incorporated practices than for partnerships and sole practitioners, so the structure of the firm affects the limit it must buy.
Conditions and exclusions to consider
Terms vary between insurers, so treat these as the questions to ask rather than a description of any one policy.
What the Minimum Terms allow
Very little. The permitted exclusions are narrow and exist mainly for matters such as trading debts and partner disputes, which is a deliberate feature of a scheme designed to protect clients.
Theft of client money by a third party
Not a negligence claim, so not an indemnity claim. Payment fraud is answered by crime and cyber cover, or by the firm itself, which is why verification procedures matter more than any policy wording here.
Dishonesty of a principal
Excluded for the dishonest individual while protecting innocent partners and clients. Where client money has been misappropriated the SRA Compensation Fund exists precisely because insurance is not designed to answer it.
Trading losses and partner disputes
Unpaid fees, disagreements between partners and the firm's own commercial losses fall outside the scheme, though a fee recovery action commonly draws a negligence counterclaim.
Common questions
What are the SRA Minimum Terms and Conditions?
The wording every solicitors' professional indemnity policy must meet. They set a minimum limit, permit only a short list of exclusions, and require the policy to respond to clients even where the firm has breached its own policy conditions. They are written to protect clients, which is why this class is far less negotiable than other professions.
Why is run off cover so expensive?
Because the SRA requires six years of it and an insurer is taking on the whole tail of a practice that no longer generates premium. It is a single premium for six years of exposure with no future income attached, and the cost is high enough that many firms merge rather than close.
Does our policy cover money stolen through a fraudulent email?
Generally not, because that is theft rather than negligence. Crime and cyber cover answer it, subject to conditions about verification procedures. The firm still has to make the client account good, which is why insurers ask in detail about how payment details are checked.
Should we buy more than the compulsory minimum?
If you handle transactions worth more than the minimum limit, yes. A commercial property matter or a substantial estate can produce a claim well above the compulsory figure, and the excess layer is usually a modest addition to a policy you already have to buy.
How do I get a quote from True Risk Solutions?
Call 01304 262880 and speak to a broker, or email info@truerisksolutions.co.uk with what you do, what you need cover for and a phone number with the best time to call, and a broker will call you back. We need a phone number to quote, because the cover and the price depend on questions that are quicker to answer on a call than by email.
Speak to a specialist who understands your industry
Tell us about your business and the work you undertake, and we will come back to you with cover options built around it. Call 01304 262880, or email us with a phone number and the best time to call and a broker will ring you back.