Insurance for a new surveying practice

What a surveying practice is actually exposed to

Valuation. The most claims-heavy work in the profession. Where a valuation is prepared for lending, the loss is driven by the lending decision rather than by your fee, so a modest instruction can produce a very large claim. Getting the basis of value or a special assumption wrong, or applying one without recording it, is a classic allegation — as is a valuation relied on by somebody who never instructed you.

Survey and inspection. Defects missed or under-reported: movement, damp, timber decay, roof coverings, drainage. Most of the argument is about scope — what the survey level you were engaged for includes, what was not accessible, and whether the report said so clearly enough for a lay reader to follow.

Party wall work. Appointments under the Party Wall etc. Act 1996, awards, and the disputes that follow about both the award and the fees. It is a statutory process with its own procedural traps and does not resemble ordinary consultancy.

Cost consultancy and project management. Early estimates that become budgets, interim valuations, final accounts; and, where you act as employer’s agent, the same certification exposure an architect carries. Measurement belongs here too: an area that is wrong changes a rent or a service charge for the length of a lease.

Being in buildings. Roof voids, ladders, occupied homes, damage to a client’s property while inspecting it. That is public liability, and it is a real exposure for a discipline that spends its days on other people’s premises.

The cover a new practice needs

Professional indemnity is the core cover, and for an RICS-regulated firm it has to be arranged on terms that satisfy RICS. The business description matters more here than in most professions, because the disciplines are priced very differently — a firm that describes itself as “surveying” and then takes a lender valuation instruction has a presentation problem.

Public liability for inspections, site visits and anyone visiting your premises. The distinction between the two comes up constantly in surveying, because a single site visit can generate either kind of claim.

Employers’ liability as soon as anyone works under your direction, under the Employers’ Liability (Compulsory Insurance) Act 1969, where the exemption for a sole owner is narrow. Add equipment cover for instruments, moisture meters, drones and laptops.

What RICS expects

RICS states that RICS-regulated firms must ensure that all previous and current professional work is covered by adequate and appropriate professional indemnity cover meeting the standards approved by RICS. That obligation reaches backwards as well as forwards, which is why continuity of cover matters so much in this profession.

RICS also requires the insurance to be provided by an RICS Listed Insurer — one that has agreed to provide cover in accordance with the approved RICS requirements and minimum policy wording. For a new practice that means you cannot simply buy the cheapest policy you find: the market is narrower than the general commercial market, the wording is largely fixed, and the time to start is weeks before you need cover rather than days.

The minimum limit of indemnity, the maximum uninsured excess and the run-off obligations are set by RICS and are revised, so take those figures from the current RICS requirements document rather than from any third party, this page included. If any part of the practice will produce written valuations, the RICS valuation standards supply the benchmark the work is judged against: the RICS Red Book explained, Red Book valuations and PI and scope of duty in valuer claims.

What clients and contracts require

Lenders run panels with their own conditions, and those frequently exceed the RICS minimum — a higher limit, particular wording, sometimes a trading history the practice does not yet have. If lender work is part of the plan, find out what the panels require before assuming you can do it in year one. Commercial clients and framework appointments name the cover, set minimum limits and require it to be maintained after completion, in the same six or twelve year language that appears everywhere in construction.

Your own terms of engagement do most of the defensive work: scope, purpose, basis, the assumptions you made, what was not inspected, and who may rely on the report. Reliance is where surveying differs from most consultancy, because a report can end up with a purchaser, a lender or a tenant, and the class of people who can sue you is defined by what the report says rather than by who paid the fee. A liability cap is worth agreeing, and worth checking against the RICS requirements first.

What an underwriter wants to see from a practice with no trading history

Whether the firm is regulated by RICS, and the qualifications of the people in it. Chartered status and years in the discipline carry real weight when there is no trading record to look at.

The discipline split by fee. Building surveying, valuation, quantity surveying, party wall, project management, agency, expert witness. These are priced very differently and the split is most of the rating.

Whether you do valuations at all, and if so what type, for whom, what proportion is lender-instructed, and the highest single figure you expect to value. This is the first question on a surveying risk and it changes the shape of everything after it.

Which survey levels you offer, and how work is reviewed. What your standard report templates say about scope, access and limitations, and what happens before a report goes out. For a sole practitioner the honest answer may be that nothing is reviewed, in which case say so and say what you do instead.

Previous practices and roles, and your claims history, including anything from previous employment that could attach to you personally. Add an estimate of fee income for the first twelve months; the general new-business list covers everything else.

Getting cover in place before the first instruction

Professional indemnity is claims-made: the policy that answers is the one in force when the claim is made or the circumstance notified, not the one in force when you inspected the property. A survey carried out uninsured stays uninsured, however long afterwards the complaint arrives.

Set inception on or before your first instruction; the policy will normally carry a retroactive date of inception, and if you practised previously as a sole trader and want that work brought in, it has to be asked for and agreed. Allow more lead time than you would in another profession, because cover has to come from an insurer that has agreed the RICS requirements and the proposal form asks detailed questions about work mix and valuation exposure. Surveying claims arrive late by nature — a missed defect surfaces when it worsens, an overvaluation when the security is realised — so understand what and when to notify before the first letter. More on cover before you trade.

Frequently asked questions

Does a new surveying practice have to be regulated by RICS?

It depends on who is in the firm and what it does. Firms with RICS members providing surveying services to the public generally have to be registered for regulation, and registration brings the professional indemnity requirements with it. Confirm your own position with RICS before you start trading, because the answer determines how you buy cover.

Does RICS decide what professional indemnity policy I can buy?

Largely, yes, for a regulated firm. RICS requires cover meeting standards it has approved, from an insurer on its list of those that have agreed the approved requirements and minimum policy wording. You still choose the limit above the minimum, the excess within permitted levels and the broker, but the wording and the panel are constrained.

How much cover does a new surveying practice need?

Start with the RICS minimum for your expected turnover, then look at what your instructions could actually cost. Valuation work can generate a loss many times the fee, because the measure of damage follows the transaction that relied on the valuation. Take the current minimum figures from the RICS requirements document rather than any secondary source.

Can a new practice take lender valuation work straight away?

Sometimes, but expect resistance from two directions. Lender panels set their own entry conditions, and professional indemnity underwriters treat lender-instructed valuation as the highest-exposure work a surveying firm can do. If it is central to your plan, raise it at the first conversation rather than adding it later in the year.

Do I need cover if I only do building surveys and no valuations?

Yes. A survey report is a professional opinion somebody buys a house on, and missed defects are a steady source of claims. Removing valuation from the mix changes the price and the underwriting questions; it does not remove the need for cover.

What happens to my cover if I close the practice?

A claims-made policy that is not renewed stops responding, so exposure to past work continues while the cover does not. That is what run-off is for, and RICS sets requirements for it. Establish what those are at the start rather than at the end, because run-off is part of the true cost of running a regulated firm.

Related reading: Insurance for a new business · Surveyors’ PI insurance guide · The RICS Red Book explained · What you need to get a quote

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This page is general information, not advice on a specific policy.