The SRA Minimum Terms set the floor: £2 million each-and-every-claim for sole practitioners and partnerships of natural persons, £3 million for incorporated firms (relevant recognised bodies and relevant licensed bodies, which in practice means LLPs and limited companies). But almost every law firm we deal with buys cover materially above the floor. The question is how much above, and answering it properly means thinking about three things: the work you do, the contracts your clients sign, and the cost-benefit of additional layers.
This article is a short practical guide for partners and COFAs setting the limit at renewal. It complements the full Solicitors PI Guide and the Solicitors sector page.
The starting point: the statutory minimum is rarely enough
For most firms, the SRA minimum (£2m or £3m) is the lower bound, not the answer. The reasons:
Client contracts. Commercial clients, lenders, and many corporate counterparties contractually require minimums above the SRA floor. £5m, £10m, and even £25m turn up in commercial engagement letters. If your work mix includes corporate, commercial property, banking and finance, or large-deal corporate transactions, expect contract-mandated minimums to drive your limit decision.
Single-claim severity. Conveyancing transactions for high-value property, large commercial deals, will and trust drafting with sizeable estates, and litigation involving high-stakes commercial parties can all produce single-claim values well above £2-3 million. A failed conveyance on a £4m property can produce a claim that dwarfs the statutory minimum on its own. The SRA's own guidance gives an illustrative case study where £3m cover was unlikely to be appropriate for a clinical negligence matter with potential value above £5m.
Each-and-every-claim is per-matter, not annual. The SRA Minimum Terms require cover on an each-and-every-claim basis. No aggregate limits are permitted under the MTC (clause 2.5). Each separate claim attracts the full limit independently. That is a protection against aggregate dilution but does not help if a single claim exceeds your limit. Your limit is your exposure ceiling for any one matter.
The adequate and appropriate test. Beyond the statutory floor, SRA Indemnity Insurance Rule 3.1 requires firms to take out cover that is "adequate and appropriate". The SRA expects firms to evidence a reasonable and rational assessment of cover; the regulator has said it would not second-guess a decision that the firm can demonstrate was properly made.
How to think about the right limit
Three structured questions, in order.
1. What contractual minimums are you committed to?
Pull your standard engagement letters and any framework agreements with corporate clients. The highest figure that any current contract requires is your floor. If you have a panel agreement with a lender requiring £5m, your limit is £5m or higher, period.
2. What's the realistic worst-case single-claim value across your current work?
For each material work type the firm is doing, ask: what is the largest possible claim a single matter could produce? Some examples:
- A residential conveyance on a £600k property: likely worst-case claim well under £1m.
- A commercial conveyance on a £15m office building: claim could approach the value of the property.
- A will preparing for an estate worth £5m: claim could approach the value lost.
- A piece of corporate litigation where the firm's advice underpinned a £10m commercial decision: claim could be at that level.
The exercise isn't to predict precisely; it's to identify the upper bound of credible single-claim exposure across the work the firm actually does.
3. What's the marginal cost of buying additional cover above the primary?
The structure: most firms buy a primary policy at the statutory minimum (or somewhat above) and then add excess layers stacked above. Each layer attaches at the limit of the layer below. Excess layers typically cost meaningfully less per million than the primary, because the probability of a claim breaching the higher attachment point is lower.
The 2025/26 market has reinforced this. Howden's April 2026 PII renewal review reports rate softening on excess layers up to a £10m combined limit, with rates above £10m now also beginning to soften (historically these have been keenly priced because of low claims activity at higher attachment points).
The practical effect: doubling your cover from £2m to £4m is not double the cost. The marginal cost of additional layers above the primary is typically modest, and the cost-benefit of buying £2-5m of additional limit above the statutory minimum is usually favourable unless the firm has very tight cash discipline and demonstrably low single-claim exposure.
Law Society data: of firms that purchase top-up cover, 44% buy £2-3m of additional cover (bringing them to a £5m combined limit), with a median premium of £16,155 for the top-up.
Specific firm profiles and typical limit choices
The figures below are market norms. The right answer for any specific firm is the maximum of (contractually required), (single-claim worst-case), and (what the firm's risk appetite says it can absorb).
Sole practitioner doing residential conveyancing and wills. Statutory minimum £2m. Typical limit £2-5m. Client contracts rarely push above this for low-value residential work. Single-claim worst-case usually capped by the value of the property or estate. Marginal cost of going to £4-5m primary is usually modest enough to be worth it.
Two-to-five-partner firm with mixed commercial and residential. Statutory minimum £2m. Typical limit £5-10m. Corporate clients on the commercial side will sometimes require £5m+ by contract. The higher claim-severity work (commercial property, corporate transactions) drives the limit decision.
LLP with corporate, banking, real estate practice. Statutory minimum £3m. Typical limit £10-25m. Banking and finance work, large-deal corporate, and high-value commercial property mean panel agreements with lenders and corporate clients often require £10m+ minimums.
Large commercial firm (50+ partners). Statutory minimum £3m. Typical limit £50m+. Driven primarily by single-claim worst-case on large deals and by reputational exposure.
What about defence costs?
Under MTC clause 2.2 defence costs are payable in addition to the limit, with no monetary cap. The MTC permits one limited carve-out (clause 2.3): where a claim exceeds the sum insured, defence costs for that claim may be reduced proportionately to the ratio that the sum insured bears to the total claim. In normal circumstances, defence costs are unlimited.
The practical implication: limit selection is purely about claim quantum. You do not need to inflate the limit to leave headroom for defence costs in the way you might in some other markets.
The single biggest mistake firms make
Buying the SRA minimum and hoping. The £2m / £3m floor was set in 2005 (replacing the earlier £1m minimum) and has not been re-indexed in line with the value of work that modern law firms do. The SRA consulted in 2018 on reducing the floor to £500k (with £1m for conveyancing); the proposals did not proceed. For any firm whose work includes commercial transactions, residential property above the mid-six-figure range, or trust and estate work involving meaningful capital, the statutory minimum is unlikely to be the right limit.
The second-biggest mistake: not actually reading your client engagement letters and panel agreements for the limit they require. Many firms are technically in breach of their own panel agreements because the firm has under-bought relative to the contract requirement. That is not an SRA breach but it is a contractual exposure if a claim emerges.
How Apex helps
At renewal, your named Apex broker will:
- Review your current limit against your work mix and your current standard engagement letters
- Identify any panel or framework agreements that mandate minimum limits
- Price additional layers stacked above the primary so you can see the marginal cost of going higher
- Recommend a limit structure that matches your work and your appetite
To start a renewal review, upload your current Statement of Fact and existing policy schedule to proposal.apexinsurancebrokers.co.uk/commercial. Your named broker will be in touch.