Most professional indemnity policies can be narrowed by whatever exclusions an insurer chooses to negotiate. The Solicitors Regulation Authority's Minimum Terms and Conditions work the other way round. The MTC permits only a defined set of exclusions, and an insurer cannot introduce others into the compulsory layer. Anything not on the permitted list must be covered. This closed-list approach is central to why solicitor cover is so consistent across the market.
The permitted exclusions cover categories that sit outside the purpose of a professional indemnity policy or belong to a different class of insurance. Broadly, an insurer may exclude liability for death or bodily injury of employees that belongs to employers' liability cover, liability arising from the ownership or occupation of property that belongs to public liability or property insurance, liability for trading debts and guarantees given by the firm, directors' and officers' liability in the running of the firm as a business, and certain fines and penalties. War, terrorism and similar catastrophe perils may also be excluded within the limits the Rules allow.
The MTC permits an exclusion for the dishonest or fraudulent conduct of an insured, but only within tight boundaries. Crucially, the exclusion cannot be used to deny cover to an innocent principal or the firm as a whole where one individual has been dishonest. That protection is important enough to have its own entry in this reference series, and it is the reason a firm is not destroyed by the fraud of a single rogue partner. The permitted dishonesty exclusion is therefore narrower than the equivalent clauses many other professions accept.
Everything outside the permitted list must be covered. An insurer cannot, for the compulsory layer, exclude a particular area of work the firm undertakes, refuse cover because a claim is large, or carve out liability on grounds of non-disclosure. Nor can it impose conditions that have the effect of excluding cover by another route. This is why a solicitor's minimum-terms policy cannot be whittled down to the sort of narrow wording sometimes seen in unregulated markets. Firms should still read any top-up or excess-layer cover carefully, because those layers are not bound by the MTC in the same way.
The closed list exists to protect the client who deals with a solicitor and expects a claim to be met, and to protect firms from a race to the bottom on cover. Because insurers compete on price and service rather than on how much they can exclude, firms comparing quotes are broadly comparing like with like at the compulsory level. Accountants, whose regime under ICAEW takes a different structural approach, face a less prescriptive exclusions picture - see our accountants' PI guide for the contrast. The solicitors' PI insurance guide sets out the regime in full.
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.