Disclosure of Your Professional Indemnity Insurance Details
This month we consider a common request to ourselves as Professional Indemnity Insurance specialists, i.e. “should we disclose our Professional Indemnity details?”
Our response is to exercise caution.
Similarly, we are often asked by our clients whether they should provide a copy of their Professional Indemnity Insurance (PII) policy to other parties, such as customers, principals, funders or whomever.
With a couple of exceptions, most professions outside the legal sector do not have a standard, Minimum Terms and Conditions (MTCs) type wording imposed upon them by their regulator or professional body. Hence policy wordings can differ within the same profession, indeed some Insurers may impose clauses to the effect that provision of a copy of the PII policy could put the policyholder in breach of its terms and conditions.
For this reason, we as Brokers provide our own Verification of Insurance document which provides the basic detail of the cover held and should suffice for most, if not all purposes. As solicitors, you are also provided with a certificate of Qualifying Insurance by your Insurer as evidence of the cover held, and which can be used for these purposes.
As solicitors, you will be also aware that you are required to provide to your clients (whether in your terms of business, website, at your office etc.) confirmation of the primary layer Insurer’s contact details (i.e. the primary layer compliant with the SRA MTCs) and the territorial limits afforded by the MTC.
This is where we counsel a little caution.
Some firms do volunteer their Limit of Indemnity, where this is somewhat higher than the MTC requirements.
- Whilst on occasion there may be good commercial reasons for doing this, do bear in mind the same level of cover will need to be maintained beyond the completion of your services for the cover to be effective.
- Disclosure of a high limit of indemnity has been known to ‘encourage’ potential claimants in making allegations of negligence against the practice. Hence you may feel it is good but simple risk management not to voluntarily disclose limits beyond the minimum terms.
- Following on from the last point, firms will often use their terms of engagement in seeking to limit their liability to clients to much lower amounts and hence some consistency of approach is called for.
- Even where a claim is made against you or at least intimated, SRA Insurance Rules (clause 18) require you to disclose only limited information, being Insurer Name, Address, Contact and Policy number, sufficient for the claimant to make their claim.
In summary, should the above scenarios arise and you have any doubt about what you need to disclose then you should be able to speak initially with your PII Broker who will liaise as appropriate with your Insurer.
As always, should you wish to discuss this or any other subject impacting the professional liabilities of solicitors, please do not hesitate to contact us as below.