What is Professional Indemnity Insurance?
Insurance to protect the client, third parties and members and firms from negligence claims where a duty of care has been breached
Why must firms have PII insurance?
In line with Rules of Conduct for Firms = Rule 9.
To protect clients from a negligence claim = do not suffer financial loss
To ensure that if a firm faces a claim, they’re protected from financial loss if they can’t meet the claim from their own resources.
What is the RICS guidance on Professional Indemnity Insurance?
Professional Indemnity Insurance Requirements, Version 7, wef 1 May 2020.
What is an underwriter?
The institutions who guarantee payment in case of a claim made against the company.
What are the requirements for RICS members and firms for PII?
As per Rule 9 of the Rules of Conduct for Firms, firms must have:
- Adequate and appropriate PII, for each instruction, considering potential liabilities which may exist.
- Any one claim or aggregate plus round the clock, reinstatement basis
- RICS minimum policy wording
- Cover is based on turnover in the previous year
- Underwritten by a listed insurer
- Cover for past and present members
- Protect clients, members and third parties from claims arising from neglienge claims where duty of care is breached.
- All policies must be underwritten by a RICS approved user
- Any one claim basis reinstatement basis
- Sent PII certificate to RICS on an annual basis – as part of the annual return
- Runoff cover requirements
a. Consumer – 6 years
b. Commercial – 6 years but 15 advised - Runoff Pool if provider can’t give runoff cover
- Pro-bono PII is required
- RICS Assigned Risk Pool = available for members who cannot arrange cover
- RICS – Low Earners Scheme = part time/retired
What is the current minimum standards?
£100,000 or less = £250,000
£100,001 - £200,000 = £500,000
£200,001 + = £1,000,000
What is uninsured excess?
It is the amount payable when you crash aka when a claim is made against you.
What is your company’s limit of indemnity?
£5,000,000 any one claim.
What is your uninsured excess?
£10,000 each and every claim.
On what basis do PII policies work on?
Claim made basis. Retroactive.
Covers claims made during the period of insurance, regardless of when the event happened.
What is run-off cover?
Insurance that makes sure that firms, members and staff are covered following:
• Firm ceasing to trade
• Consumer claims = minimum £1,000,000 of aggregate cover for a minimum of 6 years
• Commercial claims = adequate and appropriate for job, usually 6 years, recommended 15 years.
What happens if firms are not able to obtain run-off cover from their incumbent insurer?
RICS Run-Off Pool
What is Pro-bono?
It is work undertaken for free for public benefit, charity, or friend. E.g., RICS Charity Property Help.
Is PII cover needed for Pro Bono work?
Yes.
Where can firms find PII insurers?
List of approved providers by RICS
When did the new 2021 RICS Approved Minimum wording come into play?
1st April 2021.
