Surveyors’
Professional
Indemnity

Surveyors’ Professional Indemnity Insurance

Regardless of your area of expertise or sector, as a Chartered Surveyor, your role is pivotal in aiding clients to make informed decisions concerning the status, quantity, or value of their assets, often encompassing all three aspects. Regrettably, this signifies that any errors on your part may entail significant financial ramifications. For instance, during the 2008 financial crisis, there was a notable surge in claims against surveyors who had conducted home valuations. Insurance policies tailored for surveyors typically encompass coverage for professional negligence alongside accidental injury to third parties and employees, safeguarding against both substantiated and frivolous claims, in addition to covering associated legal expenses. Below is our comprehensive guide to the range of insurance policies appropriate for surveyors in the UK, including Professional Indemnity Insurance.

Mitigate the Risks Associated with Professional Counsel

Professional Indemnity (PI) insurance stands out as one of the foremost forms of business insurance for professionals offering expert advice, such as surveyors. PI serves to shield you and your business financially against claims filed by clients seeking damages due to losses incurred as a result of your professional advice or service. This coverage extends to legal defence costs, encompassing professional legal fees and expenses incurred during the defence or appeal of a claim, as well as compensation payments determined through the final verdict of a court or arbitrator, or through settlement.

Professional Indemnity insurance constitutes a vital component of any insurance programme for surveyors, particularly for those generating reports, assessments, recommendations, or valuations. RICS Chartered Surveyors are mandated to maintain a minimum level of coverage as a condition of their chartered status. Below are examples of claims against surveyors that may be covered by professional indemnity insurance:

• Inaccuracies in reports
• – Failure to detect signs of damage or wear
• – Decision-making without client consultation
• – Utilisation of outdated or inappropriate methodologies
• – Failure to anticipate potential issues
• – Incorrect or unrealistic valuations

Claims-Made Cover

Professional Indemnity insurance for surveyors operates on a claims-made basis, meaning cover is applicable solely for claims filed while the insurance policy remains active. Claims made after the policy’s expiration or cancellation are not covered. For instance, if you possessed professional indemnity insurance in 2022 but allowed it to lapse at year-end, you would not be covered in 2023 if a client were to sue you for negligent advice provided during your coverage in 2022.

Retroactive Dates

To facilitate seamless transitions between insurers without gaps in cover, professional indemnity insurance policies typically feature a “retroactive date”. When switching to a new insurer without a gap in cover, the retroactive date precedes the start date of the new policy. The RICS specify that their qualifying insurance is fully retroactive, i.e. no retroactive date.

Run-Off Cover in Surveyors Professional Indemnity Insurance

In the event of retirement or the practice ceases during the policy period, surveyors still require “run-off” professional indemnity insurance, with RICS surveyors having a run-off period of up to 6 years. This is essential because clients can file negligence claims against surveyors even posthumously, in certain instances up to 6 years after the completion of the work.

Essential Insurances for Surveyors

Apart from Professional Indemnity insurance, surveyors may require other standard forms of business insurance such as public liability or employers’ liability. Below are descriptions of some major types of insurance that surveyors might need:

Public Liability Insurance for Surveyors – Safeguarding against Public Incidents

Public Liability insurance shields surveyors against claims of property damage or bodily injury by clients or members of the public, such as slips and falls either at their business premises or while visiting a site.

Employers’ Liability Insurance – Addressing Workplace Injuries

Employers’ Liability insurance is mandatory for businesses with employees, covering legal costs and compensation payments for illnesses or injuries sustained by employees as a result of their work.

Business Equipment Insurance – Protecting Essential Tools

Business Equipment Cover safeguards computers, surveying equipment, and other specialized tools against loss or damage, typically including theft, accidental damage, fire, flood, and storms.

Personal Accident Insurance – Financial Support in Case of Injuries

Personal Accident insurance provides financial assistance if a workplace injury prevents you from working, offering either weekly pay outs for temporary injuries or lump sum pay outs for permanent disabilities.

Commercial Vehicle Insurance – Tailored Cover for Company Vehicles

Commercial Vehicle insurance is essential for company-owned cars, and if personal vehicles are used for business purposes, specialised cover may be required.

Additional Considerations for Surveyors’ Professional Indemnity Insurance

Depending on specific requirements, surveyors may need other types of business insurance such as directors’ and officers’ insurance, business interruption insurance, or legal expenses insurance. Consulting with a specialist broker can help ascertain the precise insurance cover necessary for your business.

The Importance of Insurance for Surveyors

In conclusion, responsible surveyors recognise the importance of business insurance, particularly with RICS Chartered Surveyors mandated to maintain a minimum level of professional indemnity insurance as a condition of their membership. Regardless of your business structure, whether sole trader, subcontractor, partnership, or company director, securing relevant insurance policies is crucial to safeguarding your business interests against unforeseen losses or claims.

It is imperative for subcontractors, employees, or consultants to obtain written confirmation of cover under their employer or agency’s insurance policy, otherwise, acquiring personal cover becomes essential without delay.

Distinguishing Between Chartered and Non-chartered Surveyor Insurance

Insurers offering policies for Chartered Surveyors must adhere to minimum cover standards set by the RICS. While premiums for ‘chartered surveyor’ policies may be higher, they typically offer full civil liability cover, including additional protections not commonly found in ‘non-RICS’ surveyor policies.

Non-chartered surveyors are not precluded from purchasing RICS-compliant policies, and such a choice may warrant consideration for those seeking elevated coverage standards. However, opting for reduced coverage may lead to lower premiums, necessitating careful evaluation of policy coverage trade-offs.

RICS Surveyor Insurance Requirements

According to the Royal Institution of Chartered Surveyors, RICS Chartered Surveyors must maintain a minimum level of PI insurance cover, with the appropriate level contingent upon business turnover. Compliance with RICS regulations involves ensuring coverage aligns with approved standards, considering business risks and contractual obligations.

Fire Safety Cover

Given the challenges in obtaining professional indemnity cover without fire safety exclusions, particularly post-Grenfell Tower disaster, it is vital for surveyors to document correspondence with insurance brokers regarding the adequacy and scope of cover pertaining to fire safety claims.

In essence, surveying entails high stakes work where professional errors can entail significant financial repercussions for clients. Hence, securing the appropriate insurance cover is paramount, offering financial protection against potential claims that could otherwise jeopardise your business’s stability. Even unfounded claims necessitate substantial expenditures for legal defence, underscoring the critical importance of comprehensive insurance cover.

Surveyors Professional Indemnity Insurance FAQs

Do surveyors require insurance?

Absolutely, surveyors do require insurance. While they may consider various types of cover, professional indemnity insurance stands out as crucial since it’s often the primary source of claims against surveying businesses offering consultancy or advice. Additionally, public liability insurance is essential for surveyors engaging in face-to-face interactions with clients or the public. Furthermore, employers’ liability insurance is mandated by law for surveying firms employing staff. These represent only a few examples of the business insurance types that may be necessary for surveyors.

Why is professional indemnity insurance vital for surveyors?

Professional indemnity insurance is essential for surveyors to safeguard against claims of negligence or errors from their clients. Moreover, compliance with regulations set by professional bodies like RICS necessitates maintaining such insurance. Given the potential high costs associated with incorrect estimations or advice, professional indemnity insurance provides protection for both clients and surveyors. Hence, it’s understandable why the costs of professional indemnity insurance for surveyors can be relatively steep compared to other professions.

Is insurance necessary for self-employed surveyors?

Certainly, surveying firms of all sizes, including self-employed (sole trader) surveyors and larger limited companies, face risks and thus require insurance. In fact, self-employed surveyors may benefit even more from insurance as it ensures their ability to continue trading and generating income while insurance companies handle claims on their behalf.

Surveyors Professional Indemnity Insurance – What does it cover in the UK?

In the UK, professional indemnity insurance covers surveyors for legal defence costs and compensation payments arising from clients claiming that poor advice led to financial losses. This can include expenses related to project delays or extra building costs due to errors in advice.

Is public liability insurance necessary for surveyors?

Indeed, any business, including surveyors, that interacts with the public can face bodily injury or property damage claims. Therefore, having public liability insurance is crucial for surveyors to mitigate these risks.

Does a surveyor LLP need run-off insurance?

Any surveyor who has held professional indemnity insurance while in business should seriously consider obtaining run-off insurance if they cease trading. This is because claims can be made against surveyors for up to 6 years after completing the work. RICS surveyors are required to acquire suitable run-off insurance if they cease trading.

How long should surveyors hold indemnity insurance?

A surveyor who ceases practicing should maintain indemnity insurance for a minimum of 6 years after ceasing to practice as a basic precaution against historical claims. The RICS recommends a period of 6 years for its members.

Cox Mahon – Surveyors’ Professional Indemnity Insurance Brokers