Definition

In an APC context, the principal insurance consideration when appointing professional services is professional indemnity (PI) insurance — a policy that covers a firm or individual against claims arising from negligent professional advice or services. The RICS Regulation requirements mandate that all regulated firms hold adequate PI insurance as a condition of regulatory status. Additional covers — public liability, employers' liability, and product liability — may also be relevant depending on the nature of the appointment.

Why this matters for Client Care

  • At Level 2 you must understand what PI insurance is, why it is required, and what a client should check before appointing an RICS professional.
  • A client who appoints a surveyor without adequate PI cover has no financial recourse if they suffer a loss from negligent advice — the firm's assets alone may be insufficient.
  • RICS-regulated firms are required to disclose their PI insurance arrangements to clients on request, supporting transparency and informed decision-making.
  • The firm's insurance limits and exclusions must be checked before accepting an instruction, as some instructions may require notification to or approval from the insurer.
  • Where a surveyor appoints sub-consultants, checking that they hold adequate PI cover is a client care obligation, not merely an administrative one.

Key principles

Professional indemnity insurance

PI insurance covers civil liability arising from negligent acts, errors, and omissions in the provision of professional services. RICS requires regulated firms to maintain a minimum level of cover appropriate to the nature and scale of their practice. Policies are usually written on a claims-made basis, meaning the policy in force at the time the claim is made responds — this has important implications for run-off cover when a firm closes or a sole practitioner retires.

Public liability and employers' liability

Public liability insurance covers claims from third parties who suffer personal injury or property damage as a result of the firm's activities. Employers' liability insurance is a legal requirement under the Employers' Liability (Compulsory Insurance) Act 1969 for any firm with employees, with a minimum of £5m per claim. Both covers should be checked when accepting or granting an appointment.

Checking sub-consultants' insurance

When appointing specialist sub-consultants, request evidence of PI and public liability cover before work begins. If a sub-consultant is uninsured and causes loss, liability may fall back on the appointing surveyor through vicarious negligence. Retain copies of certificates on the project file with a diary note for renewal checks.

Notifications and limitations

Some instructions carry higher risk profiles requiring proactive management. A surveyor asked to advise on a contaminated property or a flood-zone asset should check whether the instruction falls within their PI policy's scope and notify insurers if required. The appointment letter should include appropriate limitations of liability, clearly communicated before the contract is formed.

Relevant RICS guidance and legislation

  • RICS Rules of Conduct (effective 2 February 2022) — regulated firms must maintain adequate PI insurance and disclose insurance details to clients on request.
  • Employers' Liability (Compulsory Insurance) Act 1969 — requires all employers to hold a minimum of £5m employers' liability cover and to display the certificate.
  • Consumer Rights Act 2015 — implies a term of reasonable care and skill into professional services contracts; PI insurance provides the financial mechanism to compensate clients if that standard is breached.
  • RICS professional indemnity insurance requirements — RICS Regulation publishes minimum requirements for PI cover levels and policy terms for regulated firms.

Ethics and Rules of Conduct angle

Rule 5 (competent service) requires members not only to hold adequate insurance, but to ensure clients understand the protection it provides and its limits. A member who accepts an instruction knowing their PI policy does not cover it — or who allows their policy to lapse — puts the client's interests at risk. This is both an ethics breach and a regulatory failure, as RICS Regulation requires continuous compliance with PI requirements as a condition of regulated status.

APC-style Q&As

Q (Level 1)What is professional indemnity insurance and why is it required for RICS members?

PI insurance covers a firm or individual against civil liability arising from negligent professional advice or services. RICS requires regulated firms to hold adequate PI cover as a condition of regulatory status, so that clients have a financially capable party to claim against if they suffer a loss as a result of negligent advice.

Q (Level 1)What does a claims-made PI policy mean in practice?

A claims-made policy responds to claims notified to the insurer during the policy period, regardless of when the negligent act occurred. When a firm closes, it must arrange run-off cover to ensure claims arising from past work are still covered after the firm ceases trading.

Q (Level 2)A client asks you to confirm that you hold adequate PI insurance before signing the appointment letter. How do you respond?

I provide written confirmation of the level of cover held, the policy renewal date, and the insurer's name. RICS-regulated firms are required to disclose this information to clients on request. I also refer the client to the terms of engagement, which set out any limitation of liability provisions agreed in the appointment.

Q (Level 2)You are appointing a structural engineer as a sub-consultant on a project. What insurance checks do you carry out before they begin work?

I request a copy of their current PI insurance certificate and confirm that the level of cover is appropriate for the scope of their appointment. I also check that their public liability cover is adequate for site activities, retain copies of both certificates on the project file, and diary a renewal check date so that lapsed policies are identified promptly.

Q (Level 3)You are asked to carry out a valuation of a contaminated brownfield site for a lender. What insurance considerations does this raise before you accept the instruction?

(example) Before accepting, I check that my firm's PI policy covers contaminated land instructions — some policies exclude or sub-limit this risk. If there is doubt, I notify my insurance broker before accepting. I ensure any environmental sub-consultant holds adequate cover. The appointment letter should include appropriate limitations of liability agreed before signature. If the lender requires a level of cover my firm cannot provide, I must decline rather than leave the client without adequate protection.