Guide
Professional indemnity insurance for law firms
Understand your professional indemnity insurance obligations as an SRA-authorised law firm. Covers how to obtain qualifying PII, the annual renewal cycle, what the SRA Minimum Terms require, run-off cover on closure, and the SRA Compensation Fund levy.
If your firm is authorised by the Solicitors Regulation Authority (SRA), you must hold professional indemnity insurance (PII) that meets the SRA Minimum Terms and Conditions (MTCs). This applies to recognised bodies, recognised sole practices, and licensed bodies (alternative business structures).
PII protects your clients if they suffer a loss because of negligent advice, errors, or omissions by anyone in your firm. Operating without qualifying insurance is a serious regulatory breach and can lead to the SRA intervening in your practice.
Who needs SRA-compliant PII
You need PII that meets the SRA MTCs if your firm falls into any of these categories:
- Recognised bodies — traditional law firm partnerships and LLPs
- Recognised sole practices — sole practitioners authorised by the SRA
- Licensed bodies — alternative business structures (ABS) authorised under Part 5 of the Legal Services Act 2007
In-house solicitors employed by non-law-firm organisations do not need separate PII under the SRA rules, although their employer may carry its own professional indemnity cover.
Before you start looking for cover
Gather the following information before approaching insurers or brokers. Having this ready speeds up the quotation process and avoids delays close to the renewal deadline:
- Your firm's SRA number and current authorisation status
- A summary of practice areas and the percentage of fee income from each (conveyancing and commercial property work typically attract higher premiums)
- Your claims history for the past 5–6 years, including open notifications and circumstances reported to insurers
- Fee income for the current and previous indemnity periods
- The number of principals, fee earners, and staff
- Details of your firm's risk management procedures, including file review processes, supervision arrangements, and complaints handling
- Any SRA regulatory history (interventions, conditions, undertakings)
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1. Review your current cover and claims record
Check your existing policy wording, excess level, and any open claims or circumstances reported. Your current insurer or broker should provide a claims summary. Identify any changes in your practice areas or fee income that may affect the renewal terms.
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2. Approach qualifying insurers or use a specialist broker
You must place cover with an insurer on the SRA's list of qualifying insurers. Check the current list on the SRA website. Most firms use a specialist legal sector insurance broker who can approach multiple qualifying insurers on your behalf and negotiate competitive terms.
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3. Obtain and compare quotations
Request quotations well before the 1 October renewal deadline. Compare not just premium but also the excess level, any endorsements or restrictions, and the insurer's financial strength rating. If your firm carries out conveyancing, confirm the policy covers the Conveyancing Quality Scheme requirements.
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4. Check the policy meets the SRA Minimum Terms
Before accepting, verify the policy complies with all SRA MTCs. Qualifying insurers must offer cover on these terms, but check that any bespoke endorsements do not inadvertently narrow cover below the minimum. Your broker can confirm MTC compliance.
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5. Bind cover before 1 October
Ensure your new policy incepts by 1 October, the start of the indemnity period. If you cannot secure cover by this date, an extended indemnity period may apply under which your previous insurer continues cover temporarily. However, relying on the extended period risks SRA action and should be avoided.
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6. Confirm cover to the SRA
Your insurer notifies the SRA directly that cover is in place. Check your firm's record on the SRA website to confirm the notification has been received. The SRA publishes details of firms that fail to renew on time, which can damage client confidence and trigger further regulatory scrutiny.
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7. Update your firm's records and notify clients if required
Update your terms of engagement, complaints procedure, and any client-facing documents that reference your PII details. If your insurer or cover level has changed materially, consider whether existing retainer letters need updating.
Run-off cover when closing your firm
If your firm closes, merges, or loses its SRA authorisation, your last insurer must provide run-off cover for 6 years from the closure date. This cover is on the same minimum terms as your active policy and ensures that claims arising from work done while the firm was practising can still be met.
Plan for run-off cover as part of any closure or succession arrangement. The cost is typically built into the premium structure, but confirm the position with your insurer before committing to a closure timetable. If run-off cover lapses, clients may need to seek compensation through the SRA Compensation Fund, which provides only discretionary grants.
SRA Compensation Fund
All SRA-authorised firms must pay an annual contribution to the SRA Compensation Fund. The Fund acts as a safety net of last resort for clients who have lost money due to a solicitor's dishonesty or a firm's failure to account for client funds. It does not replace PII — it covers situations where insurance does not respond.
Your firm's Compensation Fund contribution is separate from your PII premium and is invoiced directly by the SRA. The amount is calculated based on your firm's turnover and risk profile.
Common issues at renewal
- Late market approach — leaving the renewal process until September limits your options. Start gathering information and approaching the market by June or July
- Undisclosed claims or circumstances — failing to disclose all material facts to prospective insurers can void cover. Declare everything, including near misses and circumstances that might give rise to a claim
- High-risk practice areas — conveyancing, commercial property, and corporate transactions attract higher premiums. If your practice mix has shifted, prepare to explain the risk management measures you have in place
- SRA regulatory action — any conditions, undertakings, or disciplinary findings must be disclosed and will affect premium
What to do next
If your renewal is approaching, start the process at least 3 months before 1 October. If you are setting up a new firm, arrange PII before applying for SRA authorisation — you cannot begin practising without qualifying cover in place. If you are closing your firm, confirm run-off cover arrangements with your insurer before the closure date.