Law Firms Should Take a Positive View of PI Insurance
As the Professional Indemnity Insurance renewal date for (most) law firms approaches, we highlight the reasons to be positive about this useful and protective product.
Perhaps you view the renewal of your Professional Indemnity (PI) Insurance without enthusiasm? After all, it’s a product you hope you’ll never need.
But imagine trying to do your job without it. Let’s be clear: the practice of law is rife with potentially tricky situations, and no matter how diligently you go about your work, you could still end up on the wrong end of a civil liability claim.
By providing cover against any ensuing losses, professional indemnity PI helps you stay optimistic so you can pursue your business objectives unhindered.
The fact is, PI is part of your essential business equipment
It helps you do your job better. Actually, it does more than that: it also supports your ambition. Without PI, there would be no point expanding a law practice since increased size would only expose the partners to bigger and more ruinous claims.
And while we’re talking about claims, we all know how unexpectedly they can arise, and even when relatively minor, can still take a sizeable chunk out of your earnings. So, PI can improve your financial forecasting too.
It’s also a legal requirement
All UK legal practices must have PI as a condition of membership of their regulatory bodies. You will also need to confirm PI cover as part of renewing your practice certificate.
What will it cost?
Usually between 2-5% of fee income, based on an insurer’s view of how likely you are to face a claim, taking in the following factors:
- Firm size – employees and offices
- Gross fee income
- Type of work
- Claims history
- Any special circumstances
How much do you need?
For most sole practitioners or partnerships, the minimum sum per claim is £2 million. You can also buy excess cover if you believe the minimum won’t be sufficient to cover your exposure.
