Category: Insurance definitions · Reviewed by Chrissie Anderson, Client Executive · Last reviewed May 2026
The SRA Minimum Terms and Conditions (MTC) are the mandatory baseline that every PI policy sold to a solicitors’ firm in England and Wales must meet. They set the minimum limit of indemnity, the cover basis, the run-off period, the way excess is handled, and the exclusions an insurer is permitted to apply. A solicitors’ PI policy that falls short of the MTC is not a compliant policy.
The MTC is part of the SRA’s regulatory framework for solicitors and is published as Annex 1 to the SRA Indemnity Insurance Rules. It defines the floor — the minimum protection that must be provided to clients of an SRA-regulated firm through compulsory professional indemnity insurance. Above the floor, insurers compete on price, service and additional benefits. Below it, no insurer authorised to write the business may go.
The MTC binds the insurer rather than the firm. Once an insurer is on the panel of SRA “qualifying insurers” it agrees to write all qualifying solicitors’ PI on at least the MTC terms. The firm benefits whether or not it understood the detail at the point of buying the policy: if the wording offered is narrower than the MTC, the MTC overrides it.
There are a small number of MTC elements every solicitor and broker needs to know.
Minimum limit of indemnity. £2,000,000 each and every claim for sole practitioners and partnerships. £3,000,000 each and every claim for LLPs and incorporated practices (limited companies and ABSs). The limit applies per claim, not per policy year — there is no aggregate cap on the compulsory layer.
Cover basis. Civil liability in connection with the practice of the firm, on a claims-made basis. The trigger is the date the claim is first made against the firm, not when the work was performed.
Defence costs in addition. Defence and investigation costs sit outside the limit of indemnity on the compulsory layer. The insurer cannot erode the indemnity available to claimants by spending it on lawyers.
Excess. The excess applies only to damages and to claimant costs, not to defence costs. The insurer cannot refuse to deal with a claim because the firm has not paid the excess — the insurer must pay the claimant in full and then pursue the firm for the excess. This is a critical protection for the client.
Run-off. Six years of run-off cover when the firm closes, on the same MTC terms. The run-off insurer is the last insurer on risk before closure.
Permitted exclusions are limited. The MTC lists a closed set of exclusions an insurer may apply — broadly, dishonest acts by the insured (subject to an innocent partner provision), insolvency cover, certain bodily injury claims, contractual liability assumed beyond a solicitor’s normal duty, and a handful of others. Exclusions outside this closed list are not permitted on the compulsory layer.
Non-avoidance. The insurer cannot avoid the policy against an innocent claimant. Even if the firm misrepresented material facts at proposal or breached a warranty, the policy still responds to a claimant’s claim and the insurer pursues the firm separately for recoveries.
These protections are what makes solicitors’ PI unusually claimant-friendly compared with other professions’ PI cover.
A four-partner solicitors’ firm trades as an LLP with £1.4m fee income. It buys SRA-compliant PI at the £3m MTC limit with a £25,000 excess. A former client sues the firm for £450,000 alleging negligent conveyancing advice on a commercial purchase. Defence costs run to £85,000 over eighteen months. The claim settles at £310,000.
Under the MTC the insurer pays the £310,000 settlement direct to the claimant in full. Defence costs of £85,000 are paid by the insurer outside the £3m limit. The £25,000 excess applies to the settlement; the insurer pays the full £310,000 to the claimant and the firm then reimburses the insurer £25,000. The firm’s £3m limit remains intact for any other claim notified during the policy year because the limit is each and every claim, not aggregated.
If the same claim had arisen under a non-MTC PI policy with a £3m aggregate limit, costs-inclusive, the settlement plus defence costs would have reduced the remaining annual cover to £2,605,000. Under the MTC the firm still has the full £3m available for the next claim, and the £85,000 defence spend has not eroded protection for clients.
The MTC matters every time a solicitors’ firm renews PI, but the points at which it bites hardest are these.
At renewal when an insurer offers a “tailored” policy. Some commercial PI products marketed to solicitors look attractive on price but do not meet the MTC. They are not compliant for the regulated practice. A firm relying on such a policy is uninsured for SRA purposes and the individual solicitors may face regulatory action.
On a claim where the firm has made a mistake at proposal. If material facts were not disclosed or warranties were breached, the MTC’s non-avoidance and innocent-partner provisions still require the insurer to pay the claimant — but the insurer can pursue the firm or the responsible individual for recoveries. The protection is for the client, not for the firm that failed to disclose.
On closure. Six years of mandatory run-off, payable to the last insurer on risk, is a sizeable financial commitment. Firms planning closure need to budget for it; firms planning succession need to factor it into partner exit arrangements.
On excess. Because the MTC requires the insurer to pay the claimant in full and then pursue the firm for the excess, a firm with cashflow difficulties cannot stop a claim being paid. The exposure to the firm is the excess amount as a debt to the insurer, recoverable in the ordinary course.
Above the £2m / £3m MTC layer, firms buy “top-up” or “excess layer” PI. Top-up cover is not MTC-compliant — it is commercial PI on the insurer’s own terms — but it sits in excess of the MTC layer and only responds once the compulsory layer is exhausted. Most mid-sized firms carry a top-up tower to £5m, £10m or more, depending on the value and complexity of their work.
The market wording you will see most often:
Some insurers offer “MTC-plus” wordings that exceed the MTC in specific ways (for example, broader retroactive cover or a higher each-and-every-claim limit on certain extensions). These are marketing differentiators above the floor; the MTC remains the baseline.
The MTC sits within a wider regulatory framework. See our definition of SRA qualifying insurers for the panel of insurers permitted to write the compulsory cover, the Assigned Risks Pool (ARP) for firms unable to obtain qualifying cover in the open market, and PI insurance renewal warranties for how the proposal-form representations interact with the MTC’s non-avoidance protections.
What is the minimum SRA PI limit for solicitors?
£2,000,000 each and every claim for sole practitioners and traditional partnerships, and £3,000,000 each and every claim for LLPs, limited companies and Alternative Business Structures. The limit applies per claim with no aggregate cap on the compulsory layer. Defence costs are paid outside the limit. Firms often buy excess layer cover above the minimum, but the MTC limit is the regulatory floor.
Can an SRA-regulated firm buy non-MTC PI?
No, not for its compulsory cover. A firm authorised by the SRA must hold PI from a qualifying insurer on at least MTC terms. Buying narrower cover, or buying from an insurer not on the qualifying panel, leaves the firm out of compliance with the SRA Indemnity Insurance Rules. Above the MTC layer, firms can and do buy commercial top-up cover on the insurer’s own terms.
How does the MTC handle innocent partners?
The MTC requires cover to respond to a claim even where a partner or employee has acted dishonestly, provided other partners or employees did not condone the dishonesty. The insurer pays the claimant in full and then pursues the dishonest individual for recoveries. This protects clients of the firm from being out of pocket when one solicitor’s misconduct creates a claim others knew nothing about.
Is the run-off period really six years?
Yes. When a firm closes, the last insurer on risk is required by the MTC to provide six years of run-off cover from the date of closure, on the same MTC terms as the working policy. The premium is normally paid as a single sum at the point of closure and is typically 200% to 300% of the last annual premium, though pricing varies with the firm’s claims experience and work profile.
Can the insurer apply policy excess to defence costs?
No. The MTC restricts the excess to damages and claimant costs only. Defence and investigation costs are paid by the insurer in full, outside the limit of indemnity and without the excess applying. This prevents an insurer from delaying or limiting the defence of a claim by reference to the firm’s excess.
What happens if the firm cannot find an MTC insurer at renewal?
If a firm cannot obtain qualifying PI in the open market it can apply to the Assigned Risks Pool, a managed facility that provides limited-term cover to firms that have been declined elsewhere. ARP cover is expensive and time-limited and is intended as a bridge while the firm rehabilitates its risk profile or wind down. See our ARP definition for detail.
Does the MTC cover ABSs and licensed bodies?
Yes. The MTC applies to all firms authorised by the SRA, including Alternative Business Structures and licensed bodies. The £3m limit applies to ABSs structured as LLPs or limited companies, mirroring the position for traditional incorporated practices. The MTC’s exclusions and protections apply equally regardless of the firm’s structural form.
Can the insurer avoid the policy for non-disclosure?
The MTC prevents the insurer from avoiding the policy as against an innocent claimant. Even if the firm misrepresented material facts at proposal, the policy responds to the claim and the insurer pays the claimant. The insurer can then pursue the firm or the responsible individuals for the loss, but the client of the firm is not left without recourse. This non-avoidance provision is one of the strongest protections in the MTC.
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Apex Insurance Brokers Ltd is a Bristol-based specialist insurance broker authorised and regulated by the Financial Conduct Authority under firm reference number 724952, and registered at Companies House under number 07014570. The firm advises professional services practices across England and Wales on Professional Indemnity, Cyber and related covers. Contact us at info@apexinsurancebrokers.co.uk or on 0117 325 0027.
Last reviewed: May 2026 by Apex Insurance Brokers Ltd.
Important: this article is general information, not advice on your specific circumstances. For advice on PI insurance for your firm, contact us on 0117 325 0027 or info@apexinsurancebrokers.co.uk.
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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