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PII in the UK

PII in the UK

PII is written on a 'claims made' basis, which means that when a claim is received it's the insurer in place that will respond rather than the insurer in place when the negligent act occurred.

For example, if a member was insured on 1 January 2000 for a period of 12 months with the XYZ Insurance Company, that company would, subject to the terms of the policy, meet and pay all claims that were made during that period, as a result of any surveying activity which the member had undertaken in the past.

If on 1 January 2001 the member were to change insurers and take out a policy with ABC Insurance Company, then that insurer will, subject to the terms of the policy, meet and pay all claims arising during the period 1 January 2001 to 31 December 2001.

If a claim were to arise in 2001 as a result of work undertaken by a member some time during 2000 it would be to the ABC Insurance Company that the claim should be made, rather than to the XYZ Insurance Company.

  • Because of this claims-made basis of the insurance, your policy will contain conditions that you notify all claims and circumstances to insurers as soon as possible. In respect of circumstances an RICS policy contains a special clause so that if you innocently fail to notify a circumstance (you don't recognise it is one for example) the insurers will not avoid the policy
  • Where you receive a 'claim' (a letter formally advising you of legal action, or an indication to the effect - 'I'm going to sue you'), you must notify this to insurers as soon as practicable. Where the requirement to notify falls towards the end of the policy it's vitally important that you notify before the policy expiry date. This is onerous on you but you should ensure your firm has systems in place to deal with this eventuality or you risk your cover being voided.

Members changing insurers should be especially careful in not delaying notifying of circumstances or claims should any occur. Further details of this will be found in the forthcoming guide 'Notification of Claims'.

Claims handling

Our guide, provides a simple introduction to some of the matters relating to claims notification that our members should be aware of in connection with their PII policy.

This guide is intended as general information only and offers the most basic introduction to the subject. The duties and responsibilities are complex and wide ranging.

Anyone taking on the role of director must appreciate that claiming ignorance of those duties may not be an acceptable defence in the event that things go wrong.

For more information please contact: regulation@rics.org

Retirement

If you're a member who has retired or ceased trading, We require you to maintain professional indemnity insurance (PII) ‘run-off’ cover.

Traditionally this insurance is cheaper than ongoing insurance, subject to market conditions, with the premiums usually reducing over the period of time since the member ceased to practice.

The run-off requirement of RICS requires partners (including members of limited liability partnerships) and directors of a firm to ensure run-off is maintained for ex-partners, directors, consultants and employees. The need for run-off insurance arises because PII is underwritten on a ‘claims made’ basis.

Claims can arise at any time up to 15 years after the work was undertaken by the member. Members should make certain that their executors are made aware of this in order that they can ensure adequate provision after the death of the member.

Liability dissipates with time and insurance brokers can advise on whether there is the necessity to maintain run-off for the full 15 years, but, as a minimum you will need to comply with the run-off requirement in our PII Policy sheet below.

Find out more about regulation