For an English or Welsh solicitor, the PI policy is the only insurance the firm is required by its regulator to buy, and it is the only one that is written on terms the firm cannot negotiate.
The Solicitors Regulation Authority’s Minimum Terms and Conditions of Professional Indemnity Insurance (the MTC) sets a floor below which no qualifying insurer may go. The MTC defines the limit of indemnity, the run-off obligation, the position on innocent partners and dishonesty, the aggregation language, the notification mechanics, and the insurer’s right to recovery from the dishonest individual. Within that framework, firms can buy more limit, better terms, and a wider product. They cannot buy less. This guide is the pillar reference for solicitors’ PI in England and Wales — Scottish and Northern Irish firms operate under different compulsory regimes covered in their own guides.
Every firm authorised by the SRA must hold qualifying insurance with a participating insurer for a minimum limit of £2m any one claim (for sole practitioners and partnerships) or £3m any one claim (for incorporated firms, including LLPs and limited companies). The limit is per claim and reinstated annually. There is no aggregate cap in the primary layer because the MTC requires no aggregate.
A “qualifying insurer” is an insurer that has signed the SRA participating insurer agreement and agreed to write to the MTC. The list is published by the SRA and changes over time. Outside the qualifying insurer panel, no policy can satisfy the SRA’s compulsory PII requirement. Within the panel, however, capacity, appetite, and pricing vary materially between insurers and across the cycle.
Run-off is mandatory. On cessation of practice, a firm must purchase six years of run-off cover from its last insurer (the “expired insurer” in MTC language), priced at a multiple of the firm’s last annual premium. Run-off premiums are typically two-to-three times the annual premium spread across the run-off period in different ways by different insurers, and the bill is not optional — it is a regulatory requirement on cessation. The Solicitors Indemnity Fund Limited (SIFL) and its current successor arrangements continue cover beyond the six-year run-off period for post-six-year claims, but the basic six years sits with the expired insurer.
Top-up cover above the MTC primary layer is bought in the open market on commercial wordings. Most firms with material commercial property, corporate, litigation, or financial services work need to buy top-up; £2m or £3m is rarely enough for a firm with any single transaction over a few hundred thousand pounds.
The MTC dictates the response mechanics. Cover is on a claims-made basis with circumstance notification. Notification of a claim or a circumstance during the period of insurance preserves cover regardless of when the underlying act, error or omission occurred. The MTC requires the insurer to indemnify the insured against civil liability arising in connection with the firm’s practice.
Innocent partner cover is a core MTC feature. Where a principal commits a fraudulent or dishonest act, cover is excluded as against the dishonest principal but preserved for the innocent partners up to the policy limit. The insurer has rights of recovery against the dishonest individual. This makes the SRA primary layer notably broader than many commercial PI wordings, where dishonesty is excluded full stop.
Aggregation under the MTC follows the language considered by the Supreme Court in AIG Europe Ltd v Woodman [2017] UKSC 18 — claims arising from “one act or omission” or from “one series of related acts or omissions” or from “similar acts or omissions in a series of related matters or transactions” are treated as one for limit purposes. The “related matters or transactions” branch is the most heavily litigated and the most consequential in conveyancing fraud and mortgage fraud claims.
Common claim types fall into a recognisable pattern. Residential conveyancing: missed easements, restrictive covenants, planning issues, authorised push payment fraud on completion monies, undertaking breaches. Commercial property: rent review errors, missed lease conditions, defective title certificates. Family: pension sharing errors, undervalued matrimonial assets, missed financial relief deadlines. Will drafting and probate: ambiguous drafting, missed inheritance tax planning, lost capacity claims. Litigation: missed limitation deadlines, defective pleadings, costs orders against the firm. Corporate and M&A: defective warranties, missed conditions precedent, share transfer errors.
Insurance Act 2015 applies. The duty of fair presentation under section 3 governs disclosure at proposal. Section 11 provides that an insurer cannot rely on breach of a term to exclude or limit liability if compliance with the term could not have increased the risk of the loss that actually occurred — relevant on late notification arguments.
A hypothetical twelve-partner London firm with fee income of £8m, weighted towards residential and commercial conveyancing (60%), commercial litigation (20%), corporate (15%) and private client (5%). The firm carries £10m primary plus £15m top-up, sitting excess of an MTC layer of £3m.
A residential conveyancing matter completes in February. The seller is impersonated; £1.4m of completion monies is paid out by the firm under what later transpires to be a fraudulent identity. The buyer demands repayment. The firm notifies its insurer.
The primary insurer engages. Defence runs alongside parallel forensic and police investigations. The matter is litigated; the court finds the firm partially liable for failure to apply the standard of care expected on remote identity verification. Settlement is reached at £1.1m plus defence costs of £180,000. The claim sits well within the £3m primary MTC layer and the top-up is not engaged.
Subsequent claims against the firm from other impersonation matters in the same period are aggregated, on the Woodman “related matters or transactions” branch, as a single claim against the primary. The firm exhausts its annual £3m primary on the aggregated claim and the top-up engages for a further £600,000 across two subsequent claims that follow.
Renewal premium increases materially. The firm is required to evidence remedial steps on remote ID verification protocols. The placement holds but with a higher excess and a sub-limit on conveyancing fraud.
Apex’s view: Conveyancing firms are still under-buying limit. The risk of a single APP fraud claim absorbing the entire MTC primary on day one of the policy year is real, and the answer is not to buy slightly more — it is to buy enough that an aggregated cluster of claims does not exhaust the layer. We continue to advise high-volume residential firms to carry materially more than the MTC minimum, with top-up structured to engage cleanly. The cost is modest. The alternative — telling partners their personal capital is at risk — is not.
Apex Insurance Brokers serves UK professional services firms and commercial businesses. Call 0117 325 0027, email hello@apexinsurancebrokers.co.uk, or request a quotation.
Get a quote