Law firms should carefully assess whether they have sufficient professional indemnity insurance cover in place to meet all possible claims. Frequently this will be for an amount well in excess of the minimum required by The Solicitors Regulation Authority.
The Law Society has published a ‘Guide to top-up or excess layer insurance’ to help firms understand the level of cover they require.“We can provide advice to all our clients on the level of professional indemnity insurance they require, including anonymised comparative data with their peers,” said James Burgoyne, Director, Brunel Professional Risks. “The Law Society’s new guide covers all of the points we discuss with our clients and is a useful reminder of the importance of excess layer cover for insurance buyers.”
The Solicitors Regulation Authority requires all firms to take out a minimum level of professional indemnity insurance cover. This is either £2 million or £3 million depending on the structure of the firm. While this cover may be adequate for smaller practices, larger firms or firms advising on major or complex transactions will need far higher levels of cover. Inadequate cover could leave partners exposed to significant personal financial losses.
The Law Society’s ‘Guide to top-up or excess layer insurance’ covers the main issues which need to be considered by law firms and illustrates the risks of inadequate cover though a series of effective case studies.
“The Law Society has emphasised the importance of effective risk management in its guide,” said James Burgoyne. “It explains how firms should undertake risk assessments before renewals and also before taking on new clients, particularly if they may expose the firm to high risk practice areas. We are one hundred percent behind this advice and offer risk management advice to all of our clients as part of our PII service.”
