Why Understanding Your Professional Indemnity (PI) Cover Matters
PI protects businesses against claims for financial loss due to negligence. Policies may also cover contractual liabilities, breaches of duty, and some non-negligent acts. Your firm’s cover should inform decisions about the services you provide, the fees charged and the contracts entered and, it should shape business processes, including complaints handling.
Whether a policy covers a claim depends first on the scope of cover and then on whether the rules of the policy have been followed. Both can vary widely from policy to policy. Do not assume your cover matches your peers’ or stays the same at renewal.
Uninsured claims put company’s balance sheets and reputations at risk. They can and have forced businesses to cease trading.
The Property Institute Requirements
Firms regulated by the Royal Institution of Chartered Surveyors (RICS) must purchase PI insurance that complies with the RICS Minimum Terms. Property Institute (TPI) members that aren’t RICS regulated should ensure cover meets TPI requirements, including those applying to basis of cover, limit of indemnity, excess levels and fire safety provisions.
You Will Never Have It All Covered
The RICS Minimum Terms sets the benchmark in terms of PI cover for Managing Agents, but it is becoming harder for non RICS regulated firms to obtain this cover.
The word ‘Minimum’ is misleading as the cover provided is broad but like all insurance policies, it contains exclusions which you need to understand. Firms not covered by the RICS terms should review their policy even more carefully as exclusions are likely to be broader.
The RICS product has undergone a series of changes in recent years, with cover constricting following the Grenfell tragedy and the Covid pandemic and more recently broadening. The last set of amendments, which include a comprehensive definition of ‘fire safety’ took effect on 1 July 2025. RICS regulated firms that have renewed their PI since that date or, are approaching renewal should ensure they are covered under the latest wording.
Fire Safety
The language used in exclusions varies and whilst it might seem like semantics, you should seek support from your broker or insurer to understand the precise meaning within the context of the work your business undertakes.
Even the RICS wording restricts fire safety cover for claims relating to buildings of five storeys or more to negligence only as opposed to the broader full civil liability cover.
Cover for businesses not insured under the RICS minimum terms is likely to be more restrictive. Look out for terms such as ‘The Insurer shall not be liable in respect of any Claim arising out of Fire Safety Notifications for buildings above 4 storeys’ and for exclusions that reference ‘any aspect of the fire safety or fire performance of a building or structure’.
The TPI does not accept fire safety exclusions applying to buildings four storeys or under.
Full Civil Liability Cover
Many professional bodies and regulators, including TPI, require members to buy Full Civil Liability cover (except were applied to a specific category of building and/or work). This is typically broader than negligence-only cover, including for example cover for legal defence costs and contractual breaches. Look out for the following term, or similar, in the first section of the policy wording “We will indemnify you against any civil liability incurred in the conduct of your professional business.”
Seek Advice
Signs are emerging of insurers restricting cover for Managing Agents, especially smaller non-RICS regulated firms, as concerns increase about the risks facing the profession. If you’re unsure what your policy covers, speak to your insurer or broker.
