If you were to open up your own practice, what insurance must you have in place?
Professional Indemnity Insurance
Public Liability Insurance
Employer’s liability insurance
Why would you need professional indemnity insurance?
I would need professional indemnity insurance to protect myself and my practice from any claim for loss or damage due to negligent advice.
What PI insurance exclusions are you aware of?
I know in recent years it has become common for insurance brokers to be reluctant to provide cover for fire safety. However, insurance brokers excluding this must apply to RICS for this exclusion. From May 2021, exclusion for fire safety is not permitted for properties 4 storey’s and under.
In the February 2022 Guidance Note on PI Insurance, why do RICS require firms to have PI?
The purpose of PI Insurance is to protect a firm from :
1. Ensure if a firm faces a claim it is covered for any financial loss that can not be covered by its own resources.
2. Protect insured member and firm against the consequences of its liability to pay damages to third parties for breaches of professional duty through it’s professional work.
3. Ensure the firm’s clients do not suffer from the firm’s financial loss.
What is the minimum level of indemnity?
The minimum level of indemnity is calculated from a firm’s previous year turnover. For a turnover up to £100,000 it is £250k, between £100,101.0o to 200k it is £500k, and for turnover over £201,000 the minimum level of cover is £1million.
What is the maximum level of uninsured excess a firm must pay for a claim?
For turnover under £10million the firm must pay either 2.5% of sum insured or £10,000.00 whichever amount is greater. If the company’s turns over £10million there is no limit set.
What does fully retroactive cover mean?
PII policies work on a ‘claim made basis’ meaning the claim is covered if brought within the insured period, even if the negligence occurred previously, meaning all former work is covered by the insurance.
What do you know about Run Off Cover?
Run Off Cover must be in place for a minimum of 6 years after a firm ceases to trade and will cover the firm for any claims. For consumer consumer claims the minimum level of insurance must be £1million.
What can a firm do if their incumbent insurance broker will not provide them run off cover?
The firm can apply for insurance through the run-off pool.
How would you choose an insurance company?
I would be able to check the RICS approved list of insurers.
What limitation periods are in place under hand and under deed.
6 years when executed under hand
12 years when executed under deed
What are the requirements for PII set our by RICS?
- The cover must be on an ‘each and every’ claim basis.
- The RICS set out minimum levels of indemnity.
- The RICS sets the maximum levels of uninsured excess.
- The firm must have run off cover in place for at least 6 years.
- The PII must cover for past and present employees, directors and partners.
Do you know any Case Law relevant to PII?
Merrett vs Babb
The case dates back to 2001 and highlights the importance of run off cover. A surveyor was sued for negligence and as the firm no longer was in business the claimant successfully sued the individual for damages.
What steps would you take to set up a RICS Practice?
- Contact the RICS for guidance and obtain a company start up pack.
- Inform the RICS and register for regulation.
- Appoint a contact officer for all RICS communication and a responsible principal
- Prepare a complaint’s handling procedure.
- Obtain professional indemnity insurance cover.
- Abide the RICS rules of conduct for firms.
- Use the designation ‘Regulated by RICS’ on all practice material.
- Act in accordance with Royal Charter and Bye-Laws
- Notify RICS of any material change, liquidation or any disciplinary action
What information do registered firms need to send to RICS annually?
- It is called annual return and carried out on-line.
- Failure to do so leads to leads to a fixed penalty.
- It includes:
- Type of business and staffing
- Nature of client’s
- Training provision
- PI Insurance details
- Whether the firm holds client’s money
How do you identify your client?
Working for my company, a client is someone who we owe a duty of care which is always the client but also includes my manager, the design team and my colleagues.
How do you identify stakeholders?
A stakeholder is a person or organisation who has an interest in the project.
How a fees established?
- To establish fees I would consider the the project scope, duration, key deliverables, and budget.
- From this I would establish the time required and the resources needed.
- I would check the market to ensure a fair rate, and then apply this rate to the the time required.
- I would always review this against the total budget cost as a sense check
- I would reflect and revisit during the appointment and always be open and transparent with the fees.
What would you expect to see in a client’s brief?
- Scope of works
- Location
- Expected Duration
- Budget
- Quality standards
- Sustainability requirements
- Health and Safety objectives
What do you understand by client care?
A continuous process of understanding a client’s needs and ensuring these are met, this can be achieved by:
1. A good understanding of the client’s needs
2. Having a complaint’s handling procedure
3. Quality Assurance Procedures
4. Key Performance Indicators (KPIs)
5. Client Feedback forms
6. Lessons Learned workshop
What is good client care important?
- To retain existing client’s and secure repeat business
- Reduce the likelihood of conflict
- Good reputation
How do you conduct yourself with a new client?
With a new client I always ensure to be well mannered, well presented, polite, respectful and honest.
How do you build trust with the client?
- Always be open, honest and transparent with the client
- Act within my level of competence
- Always act in a professional manner
- Always provide a high level of service
What is the difference between a client and a customer?
A client is someone who you build a relationship with and hope to provide them services over a period of time, whilst protecting their interests. A customer is someone who purchases a commodity or service and does not require an ongoing business relationship.
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