Professional Indemnity Insurance (PII)
Professional Indemnity Insurance (PII) covers you for civil liability claims arising from your work in private legal practice. These claims most commonly involve professional negligence. PII also increases your financial security and serves an important public interest function.
PII ensures that consumers do not suffer loss, which might otherwise be uncompensated. This is important in maintaining public confidence in the integrity and standing of entities regulated by us.
Do I need PII?
If your entity is authorised and regulated by us, you are required to take out and maintain PII in accordance with the Professional Indemnity Insurance Rules.
Prior to authorisation from us you will have to demonstrate that you have or are obtaining a policy of insurance. You are unable to practise until you have the PII in place and this should remain in place throughout all the time that you practise.
Where you are awaiting PII cover we will issue you with provisional authorisation. This does not enable you to provide legal services until you have obtained PII cover. When you have this cover in place we will issue you with an authorisation certificate.
How do I get PII?
We recommend that you instruct a broker to help you secure insurance. Our Buyers’ Guide to Professional Indemnity provides you with further information on instructing a broker.
Under our Rules PII cover must be obtained from a qualifying insurer. We have provided more details on qualifying insurers below.
We have tried to make the process of obtaining insurance easier for you. We have, in conjunction with our broker and qualifying insurers, produced a single application form for insurance. All of our listed qualifying insurers should provide you with a quote for insurance from this single form. This will save you and/or your broker having to fill out numerous application forms for indemnity insurance.
The Professional Indemnity Application Form can be found here. Please fill in this form and provide a copy of it to your broker so that they can contact the qualifying insurer(s) from whom you are seeking to obtain a quote.
What is a qualifying insurer?
A list of qualifying insurers can be found here.
A qualifying insurer is an insurer that:
- Is authorised and regulated to conduct insurance business in the UK by the Financial Conduct Authority (FCA).
- Has a credit rating from AM Best of at least B+ or, Standards & Poor’s rating of at least Category BBB (CILEx Regulation does not undertake any additional steps to regulate, vet or approve qualifying insurers).
- Has signed the CILEx Qualifying Insurers Agreement.
CILEx QIA and CILEx Minimum Wording
The Qualifying Insurers Agreement (QIA) is a contract that is entered into each year between each participating insurer and us. It requires qualifying insurers to offer a level of cover which should meet the CILEx Minimum Wording. The new minimum wording applies to policies incepting from 9th October 2017 onwards.
The minimum level of cover is £2 million and applies regardless of the actual wording of the policies. The minimum level of cover is contained within the QIA.
What if £2 million is not enough?
The minimum level of cover you are required to take is for £2 million however the total amount of PII you need will depend on the size of your entity and exposure to risk. You should seek advice from your broker and/or insurer to ensure that you have a sufficient level of cover for your entity.
If you decide to obtain cover above the compulsory level of £2 million, known as 'excess layer or top up cover', this cover will not be subject to the Rules. This means that you can obtain it from any insurer, not just a participating insurer, and on different terms and conditions to the CILEx Minimum Wording. It is not necessary to buy all of your cover from one insurer.
You must not exclude or attempt to exclude liability below the minimum level of cover of £2 million. If you seek to limit your liability to a level above the minimum level of cover, the limitation should be set out in writing and you should bring it to your client's attention.
Provision of Services Regulations 2009
The Regulations require that you provide to clients information about the insurance you have in place including the contact details for the insurer and the territorial coverage of the insurance.
You have a choice of four methods by which to make this information available to your client:
- You provide your clients with such information on your own initiative.
- You make it easily available to your clients at the place where you provide the service by displaying your certificate, or where the contract for the service is concluded.
- You make it easily available to your client electronically (for example, on your website).
- Make it available in any information document you supply to your client in which you give a detailed description of the service.