Professional & Financial Services UK-wide

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.

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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

The minimum level of cover depends on your firm's legal form: £3,000,000 for any one claim for relevant recognised and licensed bodies (broadly, firms that are limited companies or LLPs), and £2,000,000 for sole practitioners and traditional unincorporated partnerships.

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 your own renewal date (1 October for most firms, by market convention). 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 your current policy expires

    Ensure your new policy incepts before your existing cover expires (1 October for most firms, by market convention). If you cannot secure cover in time, your existing policy extends automatically for a 30-day extended policy period, followed by a 60-day cessation period during which you may only work on existing instructions. Relying on these periods risks SRA action and should be avoided.

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    6. Confirm cover to the SRA

    Participating insurers report policy details to the SRA under the Participating Insurers Agreement (through annual and quarterly reports), and your firm confirms its insurance details as part of the annual firm renewal through mySRA. You must notify the SRA (and your insurer) yourself within five business days only if you enter the extended policy period or cessation period, or obtain replacement cover during those periods.

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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 without a successor practice, or loses its SRA authorisation, your last insurer must provide run-off cover for 6 years from the closure date. On a merger or succession, the successor practice's policy may instead cover claims arising from the prior practice, or the firm may elect to take run-off cover (MTC clause 5.5). Run-off 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. Contributions are flat-rate annual amounts set by the SRA each year: for 2025/26, £70 per individual and £1,950 per firm holding client money.

Common issues at renewal

  • Late market approach — leaving the renewal process until the final weeks limits your options. Start gathering information and approaching the market 3 to 4 months before your renewal date
  • 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 your renewal date (1 October for most firms, by market convention). 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.

Official guidance and resources