Setting up a new professional firm in the UK carries a fixed sequence of insurance obligations. Getting them in the right order — before the door opens, in the first month, in the first quarter and then annually — protects the practice, the client and the individual principal. This checklist walks a new firm through what to do and when.
Before opening the door
The pre-launch period is where regulator requirements are confirmed, cover is placed and the paper trail begins. The biggest cause of avoidable claims disputes at year one is a proposal form rushed or under-answered at inception.
Confirm the regulator's minimum PI requirement. Solicitors sit under the SRA Minimum Terms and Conditions (MTC), which set a £2 million or £3 million minimum limit depending on entity type. Accountants regulated by ICAEW work to the ICAEW PII Regulations, with a limit tied to gross fee income. Architects on the ARB register must hold cover meeting the ARB Code of Conduct. Financial advisers authorised by the FCA hold cover meeting IPRU-INV 13 minimums.
Place PI cover with an FCA-authorised insurer or a qualifying insurer for your regulator. An SRA-regulated firm may only use a participating insurer on the SRA's list; an ARB architect must use an insurer offering ARB-compliant wording.
Complete the proposal form accurately and in writing. Section 3 of the Insurance Act 2015 imposes a duty of fair presentation on commercial insureds — every material fact a prudent insurer would want to know must be disclosed in a manner reasonably clear and accessible. Understating fee income or glossing a known circumstance is the fastest route to a coverage dispute.
Document known circumstances and prior claims from any previous role. A circumstance that could give rise to a claim, even if no claim has been made, is disclosable. Keep the schedule of disclosed matters on file with the proposal form.
Diary run-off cover from any previous role. The individual's personal exposure may need its own run-off or successor practice provision — the SRA MTC provides six years of run-off for a ceased practice, and equivalent regimes apply elsewhere.
In the first 30 days
The first month is about aligning the regulator, the insurer and the client-facing paperwork so they tell the same story.
File regulator registration with proof of PI. The SRA requires evidence of MTC-compliant cover before authorisation is confirmed. ICAEW, ARB and the FCA each require sight of the cover schedule at firm registration.
Obtain an IPT-compliant premium invoice from the broker. UK premiums attract Insurance Premium Tax; the invoice should show net premium, IPT and total. Retain it for accounting and any regulator inspection.
Issue client engagement letters and retainers with liability language consistent with the policy. A retainer that caps liability at a figure below the PI limit is normal for commercial engagements; one that purports to exclude liability altogether may breach the regulator's code and is often unenforceable against a consumer client.
Set the file-opening protocol so material variations are captured. A change in work type, jurisdiction or fee scale mid-year is a variation and may trigger a disclosure obligation to the insurer.
In the first 90 days
The first quarter is where operational reality meets the policy.
File the first proposal-form supplement with the insurer if requested. Some insurers ask for a 90-day update on actual work profile against projections. Answer in writing and retain the copy.
Run a first client-file audit against the policy conditions. Check that the file-opening checklist, conflict check and terms of business are in place on every live matter. This is the evidence that will be asked for at renewal.
Confirm the notification pathway. Every principal should know how to notify a circumstance or claim to the insurer — usually via the broker — and the internal deadline for doing so. Late notification is a common ground for insurer challenge.
Ongoing
PI is not a set-and-forget line. The annual pattern below keeps the cover fit for purpose as the firm grows.
Review the limit against the book of work annually. A firm whose largest matter has grown from £500,000 to £5 million needs to test whether the current limit and any aggregate provision remain adequate. Regulator minimums are floors, not ceilings.
Refresh disclosure at every renewal. New services, new jurisdictions, new senior hires and any circumstances arising in the year are all disclosable.
Diary run-off cover obligations at cessation. If the firm ceases, merges or the principal retires, the run-off provisions of the regulator's rules and the policy apply. The SRA MTC provides six years of run-off automatically; other regimes require the firm to arrange it.
A worked example — solicitor sole practice
The ideal chronology for a solicitor setting up sole practice looks like this. Thirty days before opening, SRA MTC-compliant PI is placed with a participating insurer. On day one, SRA registration is filed with proof of PI attached. At 30 days, the first proposal-form supplement is filed with the insurer covering actual fee run-rate and client mix. At 90 days, the first client-file audit is completed against the PI conditions. Annually thereafter, the limit is reviewed against the book of work and disclosure is refreshed at renewal.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. This entry is general information, not advice on any particular policy.