When you begin working as a practising solicitor, you’ll quickly learn things don’t always go to plan. Due to this, it’s crucial to protect yourself and your firm from the reputational damage and financial stress which could occur as a result of a mistake being made, or an accusation against you or your firm. The insurance that provides this protection is professional indemnity insurance.
Anyone practising under the Solicitors Regulation Authority (SRA) but abide by their Indemnity Insurance Rules which state solicitors must have professional indemnity insurance at all times. Outside of this body, it’s prudent to ensure you’ve got adequate cover. You never know when something could go awry, and a professional negligence claim can damage both your reputation and that of your firm.
Here, we explore solicitors’ professional indemnity insurance in-depth, including what it does and doesn’t cover, and what to look for in a national insurance provider.
When you should take out solicitors professional indemnity insurance?
You should sign up for professional indemnity insurance as soon as you begin providing legal services. Most indemnity insurance policies require you to have been covered by your policy for a set period of time before you’re able to use the cover, so the sooner you take out insurance, the sooner you’ll be protected if anything does go wrong.
What do solicitors professional indemnity insurance doesn’t cover?
You cannot use solicitors’ indemnity insurance to cover any fines or penalties you’re issued, or any dishonest or fraudulent behaviour commissioned or allowed by your firm. Injury or property damage also cannot be covered by indemnity insurance, although other insurance policies your firm has may cover these.
No financial disputes such as personal debts, trading style liabilities of the firm or simple fee disputes can be covered by indemnity insurance, and internal conflicts within the firm will also not be covered under this kind of policy.
What solicitors professional indemnity insurance does cover?
Designed to protect both the solicitors and the firm, professional indemnity insurance covers civil liability claims for those working in private legal practice. Professional negligence is a common claim which can be defended with the use of indemnity insurance. These are typically made to impress clients who are unhappy with the result of the handling of their case, and occasionally by third parties.
Indemnity insurance can also be used to protect the firm and its solicitors against data protection claims, such as accidental data loss or data breaches. Data breaches can lead to the firm facing a huge fine, with a maximum amount of £17.5 million or 4% of the business’s annual turnover, whichever is the higher figure.
What to look for when choosing a professional indemnity insurance policy?
As with any insurance policy, it’s important to thoroughly research a number of different providers and the policies they offer. Look for an insurance firm that has been in small business for a while to avoid choosing one which could be less stable.
When you’ve narrowed down your choices to a few potential options, check out online reviews and ask colleagues or others in your industry for their thoughts. It’s important to ensure you choose a provider which has a solid reputation, not only to ensure you get the best support if you need to make a claim but also to avoid choosing a provider which may face scrutiny or fall into disrepute.