PI Insurance Flashcards
What is PI insurance?
A form of insurance for companies that provide professional services to clients
What is the latest version of the RICS Professional indemnity insurance requirements regulation document?
Version 9 effective from 2 February 2022
What is the purpose of PI insurance?
- Protects firms from financial loss.
- Covers liability for damages to third parties due to professional breaches.
- Ensures clients are safeguarded against financial losses the firm cannot cover.
What are the RICS PI requirements?
- must be an ‘each and every’ claim basis or aggregate plus unlimited round the clock reinstatement basis.
- must comply with RICS’ minimum policy wording (or more comprehensive).
- the minimum level of indemnity based on the firm’s turnover in the previous year.
- underwritten by a listed insurer.
What is the maximum level of uninsured excess (the part of each claim the firm must pay itself)?
Limit of indemnity: Up to and including £500,000
Maximum uninsured excess: The greater of 2.5% of the sum insured, or £10,000
Limit of indemnity: Over £500,000
Maximum uninsured excess: 2.5% of the sum insured
What does ‘claims made’ basis mean?
the policy covers claims that are first made against the insured during the period of insurance regardless of when the negligent act occurred
What are the minimum requirements for run off cover?
For consumer claims
RICS’ minimum policy wording for consumer (any natural person acting for purposes outside their trade, business or profession) claims, requires a limit of £1,000,000 in all for a period of six years from the expiry date of the policy in force at the time of cessation.
For non-consumer claims
The requirement is for firms to have adequate and appropriate run-off, but RICS would expect run-off to be a maintained for a minimum period of six years from the cessation of the practice. Run-off for commercial activity may be arranged and paid for on an annual basis.
