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Solicitors Professional Indemnity Insurance: A Protective Necessity

In the legal profession within the UK, solicitors face the imperative of holding professional indemnity insurance as a shield against claims of negligence. With risks inherent in legal services, this insurance is designed to cover legal fees and settlement costs should any claims of professional negligence, breach of confidence, or defamation arise.

Exclusions do apply. Notably, this insurance does not extend to disciplinary defense costs, fines, penalties, dishonest actions by insured individuals, or claims of property damage, among other specified exclusions.

The requirement for professional indemnity insurance is determined by the law society or regulatory body relevant to the solicitor’s jurisdiction. For example, in England and Wales, the Solicitors Regulation Authority mandates that all regulated firms and solicitors must hold a minimum insurance cover – £3 million for corporate entities and £2 million for partnerships and sole traders.

Within England, Wales, and Northern Ireland, regulations may differ slightly, but the principle remains consistent: professional indemnity insurance is a fundamental element of legal practice. In Scotland, the cover is managed via a ‘Master Policy’, provided by brokers appointed by The Law Society of Scotland.

Cost considerations for this type of insurance center around the proportion of fee income, ranging on average from 1% to 6%. Critical elements, like the type of clients served, the value and risk associated with cases, along with the practitioner’s claims history, play roles in determining the premium.

Beyond the core coverage, solicitors may also need to contemplate additional business insurance such as employers’ liability, public liability, directors and officers insurance, and cyber insurance, to protect other facets of their practice.

With Regulated Risks, solicitors receive thorough support when securing or renewing their professional indemnity insurance. Our services simplify the complex, ensuring that legal practitioners meet regulatory requirements and secure ample protection against claims. Our experienced team at Regulated Risks assists in evaluating risk exposure, manages the intricacies of claims history presentations, and ensures that all accompanying documentation is thoroughly reviewed and aligned with the firm’s requirements.

Written 10th January 2024

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