APC - PII Cover Flashcards
What is PII
Professional indemnity insurance
1) Insures a firm if faced with a claim it is protected against financial loss
2) Protects surveyors, clients & 3rd parties against negligence claims when duty of care is breached
What RICS document is appropriate for PII
1) RICS GN Risk Liability and Insurance (1st edition) 2021
2) Professional Indemnity Insurance [PII] Requirements Version 9 2022 (Mandatory)
As an RICS member what cover do you typically need?
PII insurance - Professional indemnity insurance covers financial loss, personal injury and property damage resulting from your negligent act or error while you’re working for a client.
* PLI insurance - Public liability insurance is there to protect you if a member of the public is injured (or their property is damaged) and your business is faced with a compensation claim as a result. It can cover you when you’re working at client sites or in public.
* Employers Liability Insurance - Employers’ liability insurance covers you and your business for compensation costs if an employee becomes ill or injured as a result of the work they do for you. It’s legally required of all businesses with one or more employees.
* Building Insurance (if you own your own premises)
ALM
What support does the RICS offer for PII?
- RICS Assigned Risk Pool is available at a cost for members who cannot arrange cover
- RICS Low Earners Scheme for retired / part time members
- RICS runs a Members Support Service (MSS) for members facing claims for work carried out by an employer who has gone into administration
When closing down a practice what sort of insurance should you take out?
Run off cover
* Run off cover must also be held for a minimum of 6 years for a limit of £1million.
How long should the run off cover last for ?
RICS details a minimum of 6 years with £1 million per claim of cover.
What if the loss exceeds the cover provided by the PII insurance?
The professional / firm is liable for the difference – in assets etc
What is run off cover ?
‘Run off’ insurance is professional indemnity insurance which covers the historic liabilities of a business and its directors when the business ceases or is acquired.
BLIPP
Name the RICS requirements for PII cover?
1) Be aware of third-party reliance – advice can only be relied upon by the client named on the TOE
2) Liability caps to manage risks associated with professional work for each instruction
3) Insurers must provide cover for fire safety claims on a property of 4 storeys or less
4) PII cover must be approved RICS insurer
5) ‘pro-bono’ (unpaid) work to charities or friends needs PII
Describe the minimum level of indemnity? Describe the excess?
Minimum levels of indemnity cover
* up to £100,000 = £250,000
* £100,001 - £200,000 = £500,000
* £200,001 + = £1,000,000 of cover
Run off cover
* (May 2020) Run off cover must also be held for a minimum of 6 years for a limit of £1million.
Maximum uninsured excess
For turnover of preceding year below 10m
* Up to and including £500,00 = the greater of 2.5% of the sum insured, or £10,000
* Over £500,000 = 2.5% of the sum insured
Turnover above 10m - no limit set
What PII cover does your employer have?
VOA Does not have PII cover
* VOA - crown takes the risk
* VOA is a special regulated firm - SPONRO. We hold a letter from HMRC indemnifying if anything goes wrong with our work - it is unlimited. This meets the RICS requirements.
Who does PII protect ?
Clients from financial loss, the firms from loss resulting in being able to continue trading and the surveyor.
What is meant by the term ‘maximum level of uninsured excess’?
The part of each claim the firm must pay itself
What should you do in case of a potential claim on your PII?
Must notify insurer in the event of:
An actual claim
A written or verbal threat of a claim
Any circumstance that the firm has reason to believe may result in a claim
Any complaint notified via the firm’s CHP
What are maximum levels of uninsured excess?
Up to 500k its highest of 2.5% or 10k above 500k its 2.5%
