Updated 11 July 2016
Professional indemnity insurance
Having professional indemnity insurance is a practising requirement; all firms must have a valid policy in place to be able to continue in private practice.
Outcome 7.13 states: "you assess and purchase the level of professional indemnity insurance cover that is appropriate for your current and past practice, taking into account potential levels of claim by your clients and others and any alternative arrangements you or your client may make."
Insurance provides vital protection for clients should unexpected events cause them financial loss.
When arranging cover, you must comply with the SRA Minimum Terms and Conditions. View guidance on professional indemnity insurance from our Ethics Team:
- The Insurance Act 2015 and consequential changes to the MTC - issued on 6 July 2016
- Professional Indemnity Insurance cover guidance - issued on 14 July 2015
The Law Society have produced a practice note on professional indemnity insurance.
If you cannot secure a new policy
Those firms that do no renew their policy for whatever reason and continue to practise will enter the Extended Policy Period (EPP).
The EPP ensures that further cover is provided by the last-named insurer for the firm for a further 90 days. The firm can use this time to secure insurance, however, after 30 days it cannot take on any new business.
It must also draw up parallel plans to ensure that, should it not gain cover, it can close in a proper manner at the end of the 90 days. Read more information on closing down.
These firms should email firstname.lastname@example.org within five business days of entry. It is also useful if they provide context on if they are planning to close or are still seeking insurance. Any of those firms that are still in the EPP after the 30 days and therefore enter the Cessation Period (CP) also have a duty to let us know of their insurance status.
Firms must also notify us if they obtain a backdated policy of insurance when in the EPP, stating the name of the new insurer and policy number.
Client financial protection review
We are reviewing issues around protection arrangements for client money. A discussion paper bringing together our current thinking has been published. Discussion paper: Protecting client's financial interests.
Please use www.sra.org.uk/indemnity to link to this page.