Blog: December 11, 2019

What does solicitors’ professional indemnity insurance cover?

Nobody is perfect. No matter how careful you are, occasional mistakes are bound to happen. If you work as a solicitor, this can cause you a lot of trouble. In our increasingly litigious culture, clients are only too willing to punish you for mistakes, especially if those mistakes lead to a loss of income or cause the client undue stress.

In order to protect yourself from ruinous legal costs, all UK solicitors are required by law to take out Professional Indemnity Insurance (PII). This covers the cost of any compensation you might have to pay out as a result of accidental negligence, as well as paying for any legal fees that you might incur in the process. PII allows you to go about your business with complete peace of mind, but what exactly does it cover? Here’s a handy guide.

What does PII cover?

PII policies will cover you for any claims made against you by a third party who believes they have incurred some sort of loss as a result of your professional actions. This can include accusations of negligence, defamation or breach of trust, and the alleged loss can be either financial or can take the form of damage to the client’s reputation. PII will cover any damages you have to pay out along with the cost of defending the claim.

Professionals having a dicussion

PII also provides “run-off” cover, which protects you against any claims made in the 6 years after the closure of your firm. This allows you to sell your practice or retire without worrying about possible legal action in the future. All insurers are obliged to offer run-off cover, but it will usually cost extra.

It is also important to note that PII works on a “claims made” basis which means that you are covered for any claims made while the policy is in place, regardless of when the incident itself occurred. For example, if a client takes you to court this week over something that happened in 2016, it doesn’t matter if you had PII in 2016 as long as you have it now.

What is excluded from PII?

Most PII policies will have certain exclusions. These vary slightly from policy to policy but, broadly speaking, they tend to relate to incidents of wilful malpractice or extreme negligence. You are not covered if you commit fraud, or if you are made to pay a fine or a penalty for breaking the law. The same goes for bodily injury or property damage caused to a client. Most PII policies will also refuse to cover internal issues such as partnership disputes or accusations of wrongful dismissal.

Choosing the right policy

PII is mandatory, but that doesn’t mean that all policies are the same. The cost and the quality of cover can vary greatly, so it’s worth taking the time to choose a good policy. Arkwright works with some of the UK’s best insurance providers to find you the best PII policy at the cheapest possible price. Our advisors have years of experience and are always happy to answer questions. Give us a call on 01204 39 52 25 for a quote.

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