Solicitors PI £2m vs £3m: which SRA Minimum Terms limit applies to your firm

Reviewed by Matthew Bartlett, Director · Last reviewed 2026-07-06

Solicitors regulated by the Solicitors Regulation Authority must carry professional indemnity insurance that meets the SRA Minimum Terms and Conditions. The MTC set a floor for how a qualifying policy behaves, and that floor includes a minimum sum insured. The figure is not the same for every firm. The MTC set two limits — £2 million each and every claim for sole practitioners and traditional partnerships, and £3 million each and every claim for LLPs and other incorporated practices. Which one applies depends on the business structure the firm uses to hold itself out to clients.

Where the two limits come from

The primary source is the SRA Indemnity Insurance Rules 2020, Schedule 1 (the Minimum Terms and Conditions). Clause 2.1 sets the £2 million minimum sum insured for unincorporated practices — sole practitioners and partnerships without separate legal personality. Clause 2.2 sets the £3 million minimum for recognised bodies and licensed bodies that are LLPs or companies. The underlying statutory requirement to carry indemnity cover sits in section 83 of the Legal Services Act 2007, with the SRA acting as the approved regulator under the Solicitors Act 1974. The MTC are how the SRA gives that duty concrete form.

Why the incorporated limit is higher

The rationale is limited liability. In a traditional partnership the individual partners are personally liable for the firm's debts, so a claimant who exhausts the policy limit can, in principle, pursue the partners' personal assets. In an LLP or a limited company, that route is closed off — the members or shareholders are shielded by the corporate form. The SRA sets a higher MTC floor for incorporated practices so that the compulsory insurance provides a larger cushion for claimants who no longer have recourse to individual assets. The extra £1 million of compulsory cover is, in effect, the regulator's price of admission to limited liability for a firm of solicitors.

The MTC floor is a minimum, not a recommendation

It is important to read the MTC limits as the lowest amount an SRA-qualifying policy may pay out, not as a target. For most firms of any real size, the MTC minimum will be well below the realistic exposure on a single serious matter. A single flawed commercial contract, a mishandled corporate transaction, a missed limitation date on a substantial claim, or a conveyancing chain gone wrong can generate a loss that dwarfs the £2 million or £3 million floor. Firms should size their limit to their actual work, not to the regulator's minimum.

Sizing the limit above the MTC floor

Common factors a broker will work through with a firm at renewal include: the largest single client or matter by fee value or contract value; the aggregate value of transactions the firm handles in a year; sector risk (commercial litigation, corporate M&A, and complex conveyancing sit at the higher end); the historical claims and circumstances notified over the last six years; and the profile of the counterparties the firm's clients tend to be up against. Firms should also consider whether their work triggers aggregation under the MTC — a series of related conveyancing transactions or matters arising from a single set of facts can be treated as one claim, which puts pressure on the each-and-every limit. That interaction is covered in more depth in the wiki entry on MTC aggregation in conveyancing transactions.

Worked example (illustrative)

Consider an 8-partner LLP with £4.5 million in gross fees. It has a commercial-litigation client generating around £600,000 of annual fees, and it takes on occasional conveyancing instructions for long-standing clients. The MTC minimum limit for this LLP is £3 million each and every claim. A realistic single-claim exposure on the commercial-litigation client — say a limitation point missed on a substantial contract dispute — could sit in the £5 million to £8 million range. A considered broker recommendation might be a £5 million each-and-every primary layer with a £5 million top-up layer sitting above it, giving a £10 million tower. The aggregation wording would be reviewed at placement so the firm understands how related matters interact with the primary limit. Premium figures are not quoted here because they depend on insurer appetite at the time of placement and the firm's own claims history. This is an illustrative example only.

The practical broker approach at renewal

At renewal, the sensible sequence is to confirm the firm's current structure (and therefore its MTC floor), map the largest realistic single-claim exposure across the current work in progress, review the previous six years of claims and circumstances, and then set the primary layer above the MTC floor with any top-up cover priced against a distinct insurer where possible. Firms that are winding down should also plan early for the six-year run-off cover the MTC require; that timing is covered in the wiki entry on run-off planning. The pool of insurers that can write MTC-compliant primary cover is a further constraint — see the SRA qualifying insurers entry. For a full walk-through of solicitors PI in 2026, see the solicitors PI insurance UK guide.

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.