Professional Indemnity Insurance Flashcards

1
Q

What is PII?

A
  • To protect surveyors, clients and third parties against negligence claims when there is a duty of care breached and a claim for damages arises.
  • Minimum level of cover based on turnover in the previous year.
  • Mandatory for surveyors working in practice.
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2
Q

What is the Assigned Risk Pool?

A
  • The ARP panel is a facility for trading member / firms who find themselves unable to obtain insurance in the open market.
  • It comprises a panel of a RICS chairman, members of the professional indemnity insurers and RICS members.
  • The initial period of cover is 12 months, to allow the firm time to return to the open PII market.
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3
Q

What does the RICS advise as the maximum level of uninsured excess on a PII policy?

A
  • Up to £500k - 2.5% of the sum insured or £10k, whichever is greater.
  • Over £500k - 2.5% of the sum insured.
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4
Q

What are the different levels of PII?

A
  • Under £100k t/o £250k cover.
  • £101-200k t/o £500k cover.
  • £200k plus £1m cover.
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5
Q

Who must Professional Indemnity Insurance policies be underwritten by? Provide some examples.

A

RICS approved insurer e.g. AIG, Allianz and AXA.

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6
Q

Who does PII protect?

A
  • The client.
  • In the event I make a mistake from financial loss.
  • My business from bankruptcy.
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7
Q

Are you aware of any case law around importance of PI & run off cover?

A

Merrett & Babb - 2002

The Court of Appeal held by a majority that the purchaser (Merrett) was entitled to recover damages from the defendant personally (Babb), despite the fact that the purchaser had not actually seen the valuer’s report and was unaware, at the time of purchase, of his identity.

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8
Q

What does ISO stand for?

A

International Organisation for Standardisation

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9
Q

What is required for ‘run off cover’?

A
  • Minimum of 6 years run off cover of £250,000 for past and present employees required but RICS recommends cover for up to 15 years.
  • Covers historic liabilities of a business after it ceases to trade.
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