Yes, in certain circumstances some solicitors can legally provide advice without professional indemnity (PI) insurance in the UK. But in reality, no solicitor should advise without it.
When can a solicitor provide advice without indemnity insurance? If a solicitor is exempt from SRA indemnity insurance rules (and has no contractual obligation to hold PI insurance) then they can provide legal advice without professional indemnity. However, a solicitor who is exempt from SRA indemnity insurance rules can still be held accountable for client losses arising from their advice and services. For this reason, exempt solicitors should have professional indemnity insurance in place even though it’s not technically required.
What firms are exempt from SRA Indemnity insurance rules?
The SRA’s in-depth guidance explains if a business needs to be authorised by the SRA in order to provide legal advice or services, or if they are exempt. While it is ultimately a business’s responsibility to determine whether they are exempt or not, the following types of businesses generally do not require SRA authorisation and might theoretically be exempt from PI insurance requirements:
- A person or business providing unreserved legal services
- Independent trade unions
- Community interest companies
- Businesses regulated by OISC or the FCA
- Businesses regulated by an approved regulator other than the SRA
What is solicitor professional indemnity insurance?
Solicitor professional indemnity insurance protects solicitors against allegations that their advice or services have been negligent, resulting in losses to their clients. It not only protects against actual losses; it can also protect against perceived losses.
PI insurance provides access to expert legal advice, legal fee coverage and can cover any costs or fees awarded by courts or agreed as part of a settlement following a claim.
Where to get Solicitor PI Insurance
Solicitors and law firms wanting PI insurance can contact specialist insurance experts to get PI insurance quotes. For PI insurance, a solicitor usually needs to speak to a specialist insurance company that can provide a quote for the policy required. This is because only some insurers are approved as “participating insurers” with the SRA, which essentially means they provide policies that meet certain minimum language and coverage requirements. This ensures that solicitors have certain standards to their coverage regardless of the insurer they choose.
The cost of the PI insurance policy varies from firm to firm, but will typically be less for single solicitors, all else equal.
When deciding on what PI insurance policy is appropriate, solicitors should be mindful of the following:
- Check what the minimum cover levels are required by the Solicitors Regulation Authority and find an insurance company that can offer the level of cover needed.
- Consider whether top-up cover for additional elements of cover is needed
- Gather all the information about the business to provide to the insurance company
- Consider the breadth, depth, and scope of work done and the fee levels
- Start early – get information together as soon as possible as the process can take weeks or even months, in some cases.
- Make sure to provide the underwriter with any additional information they request so they can make an informed decision when assessing the risk exposure
Many firms are often worried about past claims history, and rightly so. Insurers are fully aware that law firms may have had claims made against them in the past, so do not be afraid of sharing the details of the claims. If a firm can demonstrate that it has learned valuable lessons from past claims, and has put in place procedural changes to prevent reoccurrence of the claims, then the insurance company will consider this. And failing to disclose previous issues can result in an insurer invalidating insurance and not paying claims. So honestly is critical.