Professional indemnity insurance as a risk management tool
Produced in partnership with Pam Grover-Mitchell
Professional indemnity insurance as a risk management tool

The following Practice Compliance guidance note Produced in partnership with Pam Grover-Mitchell provides comprehensive and up to date legal information covering:

  • Professional indemnity insurance as a risk management tool
  • Key terms
  • Managing your exposure
  • Securing the best cover
  • Matter risk assessments
  • Total losses from negligent transactions
  • Terms of business
  • PII for risk management
  • Other types of cover for risk management

Practically, professional indemnity insurance (PII) is a means of passing on (rather than terminating or reducing) risk. This Practice Note explains what PII should actually do and how you can use it as an effective risk management tool.

Key terms

MTCs minimum terms and conditions
PII professional indemnity insurance
SRA Solicitors Regulation Authority

Managing your exposure

For PII to help a firm manage its exposure effectively, the firm must be confident that the cover:

  1. will be paid

  2. will be sufficient, and

  3. is obtained on the best possible terms

Cover will be paid

This means ensuring cover:

  1. is supplied by an insurer which can and will continue to be able to pay its claims, and

  2. matches the SRA’s MTCs required of all approved insurers

Cover is sufficient

The Law Society requires a minimum of £2m in cover for partnerships (£3m for LLPs and incorporated practices), but this is a very general guideline. What constitutes sufficient cover will depend on your firm’s:

  1. general practice composition

  2. terms of business

  3. work types, and

  4. volume of work in each of its specialist areas

Cover is obtained on the best terms possible

Solicitors invest a huge