The SRA Minimum Terms are not a policy wording — they are a floor that every qualifying insurer must build their wording on top of, and reading them properly is the most useful hour a managing partner can spend.
Most solicitors think of their professional indemnity policy as “the SRA policy”. In reality the policy is the insurer’s own wording, and the Minimum Terms and Conditions of Professional Indemnity Insurance (MTC) sit on top of it as a non-negotiable baseline. Any term in the insurer’s wording that conflicts with the MTC is overridden in the firm’s favour. This walkthrough takes each substantive clause in turn — what it says, what it means commercially, and where the wording in the policy itself can still bite. The statutory backdrop is the Solicitors Act 1974, which gives the SRA the power to make indemnity rules; the current vehicle is the SRA Indemnity Insurance Rules and the MTC schedule appended to them.
Every authorised insurer offering primary cover to firms regulated by the Solicitors Regulation Authority must be a “participating insurer” and must sign up to the MTC. That commitment is bilateral: the insurer agrees with the SRA that its wording will comply, and the firm separately holds a policy contract with the insurer. If the wording does not comply, the MTC is read into it anyway. This is unusual in the UK PI market — RICS uses a similar minimum wording approach, but most other professions either set a sum insured floor or leave wording entirely to the market.
For a buying partner, this has three immediate consequences. First, the basic shape of cover does not vary between participating insurers — limit, aggregation, defence costs, run-off and the innocent insured wording are essentially uniform. Second, where insurers compete is on price, service, claims handling, capacity for top-up, and the bits of their wording that genuinely sit above the MTC floor (extended innocent partner cover, broader cyber, wider definitions of insured). Third, the parts of the wording that look like negotiable points often are not — an insurer cannot agree, for example, to apply a per-claim excess to defence costs even if both sides want to, because the MTC forbids it.
The MTC also explains why solicitors’ PI is the most rigid PI market in the UK. The buying conversation is about limits, retentions, top-up and the firm’s risk profile — it is not, except at the margins, about wording.
The MTC is organised into a small number of clauses, each doing distinct work.
Clause 1 — Insuring agreement. The insurer agrees to indemnify each insured against civil liability arising from the firm’s private legal practice, plus defence costs, plus claimants’ costs. “Civil liability” is broad and includes liability for breach of duty in tort, contract, equity, trust, statute, and for breach of warranty of authority. The trigger is claims-made: the policy responds to claims first made against the insured during the period of insurance, plus circumstances notified during the period that subsequently become claims.
Clause 2 — Limit of indemnity and aggregation. The minimum sum insured is currently £2 million any one claim for most firms, and £3 million any one claim for firms structured as incorporated practices (LLPs and limited companies). These are floors — firms can and frequently do buy more. Importantly the limit applies to each claim, not in aggregate, with the critical caveat in clause 2.5 that one claim can be made up of multiple “matters” that are aggregated together. Aggregation is the single most important commercial point in the MTC: claims arising from “one act or omission”, “one series of related acts or omissions”, “the same act or omission in a series of related matters or transactions”, or “similar acts or omissions in a series of related matters or transactions” are treated as one claim and share one limit. The Supreme Court’s analysis in AIG Europe Ltd v Woodman [2017] UKSC 18 remains the leading authority on the “related matters or transactions” wording.
Clause 3 — Excess. Excesses are permitted but, crucially, the excess cannot be applied to defence costs and cannot be applied so as to require the insured to fund the defence. The insurer must pay first and recover the excess from the firm afterwards. For firms with cash-flow concerns this is structurally protective.
Clause 4 — Defence costs in addition. Defence costs and claimants’ costs are payable in addition to the limit of indemnity. This is the single most under-appreciated feature of the MTC. A £2 million limit policy is not a £2 million policy — it is £2 million for damages, plus whatever it takes to defend the claim. In contrast, most non-MTC PI policies have costs inclusive within the limit, which can erode cover dramatically in protracted litigation.
Clause 5 — Notifications and conduct of claims. The insured must notify claims and circumstances as soon as practicable. The insurer takes conduct of claims but cannot settle without the insured’s consent. Equally the insured cannot settle, admit liability or incur defence costs without insurer consent — though see clause 7 below on innocent insured rights.
Clause 6 — Special conditions and exclusions. The MTC permits a narrow set of exclusions only. The big one is dishonesty: insurers may exclude claims arising from the dishonest or fraudulent acts of an insured — but only in respect of the dishonest individual. Innocent partners and the firm itself remain covered. The insurer cannot exclude liability for prior known circumstances if the firm did not in fact know of them.
Clause 7 — Innocent insured. Even where dishonesty is excluded as against the wrongdoer, the policy must continue to respond to the firm and to innocent partners, members and employees. This is the protection that lets solvent firms survive a rogue partner.
Run-off. On cessation of practice without a successor, the MTC requires 6 years of run-off cover on the same MTC basis. This is a contractual obligation of the participating insurer, not an option for the firm.
Consider a 10-partner commercial firm with £8 million in fee income, holding a £2 million primary policy plus £8 million of top-up giving a £10 million total limit. A residential development client sues the firm in respect of a series of plot conveyances on a single site — 40 plots, similar advice, similar errors in the title checks. The firm’s instinct is that there are 40 claims and the limit applies to each. The insurer’s position is that this is “similar acts or omissions in a series of related matters or transactions” under clause 2.5 and aggregates to one claim. Total losses are £6 million.
Under aggregation, the £2 million primary responds in full, the top-up responds to £4 million, and the firm has £4 million of headroom remaining on its top-up layer for any further unrelated claim in the year. Defence costs — let us assume £600,000 — are paid in addition to the £2 million primary limit, but inclusive of the top-up layer where the top-up wording so provides. The financial outcome to the firm is the excess (often £25,000-£100,000 for a firm of this size) and the loss of headroom on its annual top-up tower.
Have your broker walk you through clause 2.5 in writing for any matter that could give rise to a clustered claim. Ask the broker to confirm in the renewal report that the primary policy complies with the MTC and to identify any places where the wording goes above the MTC floor — for example a wider definition of “insured” to capture consultants, or extended innocent partner cover. Confirm the primary limit in light of the firm’s structure (LLP / limited company / partnership) and the SRA’s current requirement. Stress-test your top-up tower against a single aggregated claim scenario, not against multiple unrelated claims; the former is where towers usually fail. Finally, ask whether the policy contains any conditions precedent that could be challenged under section 11 of the Insurance Act 2015 if breached — risk management conditions, claims notification conditions, and conduct conditions are the usual candidates.
Apex’s view: The MTC is the most protective minimum wording in any UK PI market, but it does its best work when the firm understands it. We routinely find buying partners who treat their £2 million primary as a hard ceiling and have not modelled an aggregated claim against their top-up tower. The right test is not “how much do we buy?” — it is “what is the largest single matter or related series of matters this firm could be sued on, and does our tower hold against aggregation under clause 2.5?”. If the answer to the second question is no, the limit is too low regardless of what peers are buying.
Apex Insurance Brokers serves UK professional services firms and commercial businesses. Call 0117 325 0027, email hello@apexinsurancebrokers.co.uk, or request a quotation.
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