Solicitors’ Professional Indemnity Insurance (PII) will cover you if claims are made against you by your client, or a third party, arising from the legal services you have provided. PI will meet the costs of any compensation you pay to the Claimant and any legal costs incurred defending the claim. (Source: The Law Society)
What is PII?
As an expert in providing legal services, solicitors and law firms are often called upon to defend a range of legal issues. Often these issues have a financial cost to the other party. This cost can range from complex issues such as litigation, harassment claims, to simple, but expensive litigation mistakes, such as failing to serve a set period of time for an appeal.
This may seem like a cost you do not want to pay on your own, so the use of PI insurance can be a great way to lessen the financial costs to you and your clients in the event of any claim being made.
What issues are covered by PI insurance ?
PI insurance will cover any issues that arise in connection with the provision of your legal services and advice. Issues that have been demonstrated as a cost to the client generally include:
- Compensation awards
- Guidance notes
- Claims by your clients that the nature of your service did not meet their requirements
- Negligence claims
- Professional indemnity claims
- Professional Negligence claims
The majority of solicitors and law firms will be covered by this type of insurance, as it is deemed a mandatory type of cover in the UK, for both solicitors and law firms.
In what ways can PI insurance protect you?
As a legal professional, you will often be faced with difficult insurance claims, often due to behaviour from your clients. Either way, IF these claims are successful and you do not have PI insurance, you will be required to pay any costs of the claim on your own. In addition to this, PI insurance can also offer you advice on potential litigation and arbitration situations, helping you avoid further loss of finances.
How do I apply for PI insurance ?
PI insurance is a type of insurance that you can gain over a very short period of time and can be applied for in a range of ways.
- Firstly, you can apply for this insurance directly with your chosen provider, as many will take applications over the internet or via an email application.
- Secondly, you can get insured through your indemnity society, as premiums will generally be included within your PI and insurance premiums.
- Thirdly, or alternatively, you can gain PII insurance through another online broker with your selected insurer.
What does PI insurance cost ?
The cost of PI insurance will be based on a number of factors, including the amount of work you do year to year in relationship to your payment for insurance. The average cost of PI insurance for a firm of solicitors is about ?30 /m, with the cost rising to in excess of ?100 /m for firms who are subject to litigation. If you are a solicitor working alone, the cost of your PI insurance will be slightly higher, at about ?110 /m.
What do I need to take into consideration before I choose PI insurance for my legal practice?
Before you choose PI insurance , there are a number of things you need to take into consideration. Firstly, you need to choose your insurance company carefully due to the cost of this type of insurance, as this will in effect represent your overheads for your business. While it is very important to get the best insurance, it is also important to remember that you will be limited in your choice of insurer, as companies writing PI insurance are subject to regulation by the LCCP to ensure they are delivering a good service and are financially sound
Additionally, you will need to consider your market situation and how it may affect your PI insurance premium. If there is a greater risk of litigation in your area, this may present a higher risk for you, whereas if you work in a time sensitive industry, such as conveyancing, you may have a better chance of claiming against your clients.
How could my choice of PI insurance impact my business?
PI insurance is an important part of your business, as it will allow you to operate without any financial risk, should you have a claim against you. It is important to note, however, the effect this could have on your business as you may have to meet the cost of the claim as well as the PI premium. You must also be prepared to also have your policy reviewed by your premium provider, as they will assess your risk and transfer that risk over to their insurer at a cost to your premium.
Looking for a PI Insurance Specialist?
If you have any questions about PI Insurance, you may want to ask a local insurance broker about the best way to provide PII cover for your business. If you are a solicitor, you may want to see who your indemnity society is current using as their PI Insurance provider, as this may be something you will not want to change.