Professional indemnity

SRA minimum terms and conditions (MTC) explained

In short: The SRA minimum terms and conditions are the compulsory floor for every solicitors’ professional indemnity policy in England and Wales. They fix a minimum sum insured of £3m or £2m depending on the type of body, put no monetary limit on defence costs, prescribe the aggregation clause, and set out exactly what happens when a firm cannot obtain replacement cover: an extended policy period, then a cessation period, then six years of run-off.

Category: Professional indemnity
Also known as: SRA MTC, minimum terms and conditions, qualifying insurance, SRA Indemnity Insurance Rules
Related concepts: solicitors’ professional indemnity, aggregation clause, run-off cover

What the minimum terms are

The SRA Indemnity Insurance Rules require an authorised body to take out and maintain qualifying insurance with a participating insurer. Qualifying insurance is a policy that complies with the minimum terms and conditions — the MTC — which are annexed to those rules. The MTC are not a suggested wording. They are a floor: an insurer may offer more, but any term of the policy that is inconsistent with the MTC is, so far as the insured is concerned, of no effect.

Because the terms are compulsory and standard, a solicitors’ PI quotation is much less about the shape of the cover than in other professions and much more about limit, excess, price and the insurer behind it. Where the real variation lies is in what sits above the minimum — excess layers, additional limits and extensions — and in how the aggregation clause happens to apply to that particular firm’s work.

The minimum sum insured

The minimum sum insured for any one claim, exclusive of defence costs, is £3 million for a relevant recognised body or a relevant licensed body, and £2 million for any other authorised body. The important words are “any one claim” and “exclusive of defence costs”. Because the minimum is expressed per claim rather than in the aggregate, the number of separate claims a set of facts produces directly determines how much cover is available — which is why the aggregation clause matters as much as the limit.

Defence costs are not limited in money

The MTC require that there is no monetary limit on the cover for defence costs. The policy may, however, limit the insurer’s liability for defence costs proportionately where a claim exceeds the sum insured. That is a materially better position than the typical commercial PI policy, where costs are often inclusive of the limit, and it means that a firm defending a substantial but ultimately unsuccessful claim is not eating its own indemnity limit to do so.

Participating insurers

Cover must be with a participating insurer — an insurer that has signed the SRA’s participating insurer’s agreement and thereby agreed to write on the minimum terms. A policy from an insurer outside that arrangement is not qualifying insurance, whatever it says on the schedule.

The aggregation clause

The MTC prescribe when separate claims are treated as one. Claims may be regarded as one claim where they arise from: one act or omission; one series of related acts or omissions; the same act or omission in a series of related matters or transactions; or similar acts or omissions in a series of related matters or transactions. The MTC also provide that all claims against one or more insured arising from one matter or transaction will be regarded as one claim.

The third and fourth limbs are the contentious ones, and the Supreme Court considered the phrase “a series of related matters or transactions” in AIG Europe Ltd v Woodman [2017] UKSC 18, holding that the transactions must be related to each other in an intrinsic sense rather than merely sharing some external connecting factor, and that whether they are is a question of judgment on the facts. For a firm doing repetitive work for many clients on a single scheme or development, this is the clause that decides whether it has one £3 million limit or many. See how the SRA wording compares with other regulators for the contrast.

When a firm cannot get replacement cover

The MTC set a defined sequence rather than leaving a firm to negotiate one. If a firm has not obtained replacement qualifying insurance by expiry, the policy continues for an extended policy period of 30 days from expiry. If cover is still not in place, a cessation period follows, running to 90 days from the date the extended policy period commenced. During the cessation period the firm must not take on new instructions, and it must cease practice promptly and by no later than the expiry of the cessation period unless it obtains qualifying insurance in the meantime.

This is a fast-moving, high-consequence timetable and firms in it need help immediately rather than at the end of it. We have set out the practical steps separately in what to do when solicitors’ PI has not been renewed.

A note on terminology

Older material refers to an “Extended Indemnity Period” followed by a “Cessation Period”. That terminology is obsolete: it belongs to the position before 25 November 2019. The current MTC use extended policy period and then cessation period, and the durations described above are the ones that apply now. If a broker or adviser is still using the old phrase, treat it as a sign that the advice may be out of date.

Run-off

The MTC require the policy to provide run-off cover for an additional six years following cessation, in respect of the ceased practice’s acts and omissions. Run-off is the single largest cost most firms face on closure or retirement and it is not optional, so it belongs in succession planning years before it is needed rather than in the month a firm decides to wind down. See run-off cover for the general principle.

Frequently asked questions

How much PI cover must a law firm carry under the SRA minimum terms?

The minimum sum insured for any one claim, excluding defence costs, is 3 million pounds for a relevant recognised body or relevant licensed body, and 2 million pounds for any other authorised body. Many firms buy well above the minimum, and the SRA minimum is not a judgment about what any individual firm needs.

Are defence costs inside the limit?

No. The minimum terms require that there is no monetary limit on the cover for defence costs, although the policy may limit the insurer's liability for those costs proportionately where a claim exceeds the sum insured. This is more generous than a typical commercial professional indemnity policy, where costs are often within the limit.

What is the extended policy period?

If a firm has not obtained replacement qualifying insurance by expiry, cover continues for an extended policy period of 30 days from expiry. If cover is still not obtained, a cessation period runs to 90 days from when the extended policy period commenced, and the firm must cease practice by the end of it unless qualifying insurance is obtained.

Related entries

This entry is part of the Apex Insurance Wiki. It is insurance information about how UK cover responds to the rules described, and is not legal or regulatory advice. Rules, limits and wordings change; the position stated is as at August 2026. Check the primary source and take your own professional advice before relying on any of it.

Solicitors’ PI, read properly

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