Professional indemnity insurance is an essential form of cover for all solicitors and law firms. In this post we will explain what solicitors professional indemnity insurance covers; to help you understand why you need it.
What Is Professional Indemnity Insurance?
Professional indemnity insurance, sometimes referred to as PI insurance, can cover law firms, along with sole practitioners, partners, and other employees, against claims of negligence, breach of trust or confidentiality, or defamation.
If someone makes a claim against a law firm, professional indemnity insurance can cover any legal costs that arise, plus any compensation payments that may be due. If you or your firm does not have professional indemnity insurance cover, then you or your firm will be liable to cover these costs.
Who Needs Professional Indemnity Insurance?
The Law Society outlines a few scenarios in which you are required to get solicitors professional indemnity insurance:
- You are a solicitor working in private practice.
- You work in-house for clients other than your employer, particularly if you provide commercial legal advice services.
- You work at a law centre, at a charity, or at another non-commercial legal advice service provider.
- You work for a foreign law firm.
There is no such requirement to get professional indemnity insurance if you only work in-house for your employer (as your employer will most likely have cover in place); or if your firm operates entirely overseas. However, some overseas jurisdictions may impose their own indemnity insurance requirements.
What Does Solicitors Professional Indemnity Insurance Cover?
If one of your clients makes a financial loss as a result of using your service, they may make a claim against you. Professional indemnity insurance can cover you for:
Negligence Claims
For example, a solicitor provides conveyancing services as part of a house purchase, and they neglect to request certain key documents, such as building regulations approval for extensions and renovations. The buyers may ultimately receive a fine for non-compliance with regulations. If so, they could make a claim against their conveyancing solicitors, for failing to properly research the compliance before the sale.
Breach of Trust or Confidentiality Claims
For example, a solicitor may accidentally leave a laptop or another device on a train, which could compromise sensitive client data. This could put clients at risk of data fraud or identity theft. As a result, some clients may make a claim against the solicitor on the grounds of breach of trust or confidentiality.
Defamation Claims
A client may feel that a solicitor has misrepresented them, whether in court or in dealings with other clients. If the client feels that they made a financial or a reputational loss as a result of this alleged defamation, they may make a claim against their solicitor.
Get The Specialist Solicitors Professional Indemnity Insurance You Need From James Hallam
James Hallam is an independent Lloyd’s broker with a dedicated team of experienced insurance professionals who care about protecting your business.
Whether you are an independent solicitor running a private practice, or you are a director or partner of a law firm, we can advise you on the regulatory requirements concerning professional indemnity insurance, and other forms of cover. We can then help you get the tailored cover you need at a competitive price.