Getting PII cover right

What PII is and why it's compulsory

PII protects your firm — and your clients — against claims of negligence or other civil liability arising from your work. Every SRA-regulated firm must hold qualifying insurance: a policy that complies with the SRA's Minimum Terms and Conditions (MTC) and is placed with a participating insurer on the SRA's list. You must have cover in force before you start practising, and you cannot get authorised without evidence of it.

The minimum levels of cover

The MTC sets a minimum sum insured for any one claim, exclusive of defence costs:

• £3 million for relevant recognised bodies and licensed bodies — broadly, limited companies and LLPs;
• £2 million in all other cases — broadly, sole practitioners and partnerships.

Note this links back to your choice of structure: incorporating raises your minimum cover from £2m to £3m. The MTC also requires no limit on defence costs, so legal costs of defending a claim do not eat into your sum insured.

"Adequate and appropriate" — usually more than the minimum

The minimum is a floor, not a target. The SRA's Indemnity Insurance Rules require your cover to be "adequate and appropriate" for your firm's specific risks. A firm doing high-value commercial property or probate, for example, may carry exposure well above the minimum and should buy a higher limit accordingly. The SRA expects you to make a "reasonable and rational" assessment of the level you need — and to record it.

Claims-made cover and run-off

PII is written on a claims-made basis: what matters is having cover in place when a claim is made, not when the work was done. That has two consequences:

• You must keep continuous cover, year after year, to stay protected against claims about past work.
• When a firm closes without a successor practice, the policy must provide six years of run-off cover — protecting you against claims that surface after you stop trading. Factor the cost of run-off into any decision to close.

Know what isn't covered

PII covers civil liability from your practice, but it is not a catch-all. It will not typically cover things like employment tribunal awards, your firm's trading debts, or fines and penalties. Read the policy — and any excess and aggregation terms — so you understand where your exposure sits.

How to compare quotes

When you gather quotes (a broker who specialises in the legal sector can help), look past the headline premium to:

• the limit of indemnity and whether it suits your work, not just the minimum;
• the excess per claim and how it is applied;
• the insurer's financial strength and reputation for handling claims;
• any cover above the MTC (top-up layers, additional protections);
• payment terms — premiums are often due up front, which matters for your first-year cashflow.

This is general information, not insurance advice, and the SRA's rules and Minimum Terms change. Confirm current requirements with the SRA and take advice from a specialist PII broker.

Sources & further reading

• SRA — Indemnity Insurance Rules & Minimum Terms and Conditions
• SRA — Professional Indemnity Insurance guidelines