Professional Indemnity Insurance

Section 1

Purpose

Professional Indemnity Insurance (PII) protects an RICS-regulated firm against claims arising from negligent professional acts, errors, or omissions. It is not optional — it is a mandatory requirement under Appendix A, firm professional obligation 2 of the RICS Rules of Conduct, for all RICS-regulated firms in the United Kingdom.

Understanding the RICS PII requirements is a core APC topic. You must know the minimum limits, the excess rules, and the key policy features that are tested in APC interviews.

Section 2

Key Principles

The current requirements are set out in RICS Professional indemnity insurance requirements (UK and Republic of Ireland), Version 11, effective 1 July 2025.
Appendix A of the RICS Rules of Conduct (professional obligation 2 for firms) requires that a firm ensures all previous and current professional work is covered by adequate and appropriate indemnity insurance meeting RICS-approved standards.
PII policies operate on a CLAIMS MADE basis — the policy in force when a claim is made (not when the work was done) is the relevant policy.
The policy must provide cover on: (a) any one claim or aggregate basis with unlimited round-the-clock reinstatement — except that Fire Safety, Asbestos and Pollution cover may be on an aggregate-only basis; and (b) full civil liability wording as a minimum, except that Fire Safety cover for buildings of 5 storeys and above, and EWS1/FRAEW cover, may be written on a negligent act, error or omission basis.
Policies must be fully retroactive — covering all past and current work (retroactive date of 'none'). Exception: Fire Safety cover for buildings of 5 storeys and above, and EWS1/FRAEW cover, may carry a retroactive date of 1 July 2024 or later.
Cover must extend to all past and present partners, directors, members, and employees.
Policies must be placed with an RICS-listed insurer. The current list is published on the RICS regulation page (rics.org/regulation).
Fire Safety cover for buildings of 5 storeys and above is mandatory from Listed Insurers for services undertaken on or after 1 July 2024. Cover may be written on a negligent act/error/omission basis, aggregate basis, with Defence Costs included within the limit of indemnity.
Fire Safety cover for buildings of 4 storeys or lower must remain on full civil liability wording.
EWS1/FRAEW cover (buildings up to 18 metres) applies where a member has signed off the work under the RICS EWS Assessment Training Programme; the same aggregate/negligent-act basis applies to services from 1 July 2024.
Defence Costs are payable in addition to the limit of indemnity, except for Asbestos, Pollution and Fire Safety claims (where Defence Costs may be inclusive within the limit).
Cyber cover is aligned with the International Underwriting Association (IUA) model clause for surveyors' PII.

Run-Off Cover

When a firm ceases to trade, RICS requires fully retroactive run-off cover to protect clients and third parties.
For consumer claims: minimum of £1,000,000 in all, for a period of six years from the expiry date of the policy in force at the time of cessation.
Under the 1 July 2025 Minimum Policy Wording update, consumer run-off attaches automatically for six years once any part of the premium has been paid, including in insolvency. The prior requirement for firms to notify their insurer on cessation (as a condition of run-off attaching) has been removed.
For non-consumer claims: adequate and appropriate run-off is required, with RICS expecting a minimum of six years from cessation.
Firms unable to obtain run-off from their incumbent insurer or on the open market may apply to the RICS Run-off Pool.

Section 3

Practical Application

Step 1

At renewal, confirm your firm's turnover for the preceding year and identify the required minimum limit of indemnity from Table 1.

Step 2

Confirm the policy excess does not exceed the maximum permitted under Table 2 for your limit of indemnity.

Step 3

Check the retroactive date and ensure it covers the full period of the firm's trading activity.

Step 4

Confirm the policy is placed with a listed RICS insurer.

Step 5

Retain a current PII certificate on file. Make it available for inclusion in EOI/fee proposals and upon client request.

Step 6

Notify your insurer promptly of any circumstances that might give rise to a claim — do not wait for a formal claim to be made.

Step 7

Ensure your firm's CHP is in place and communicated to the client at appointment stage. A well-evidenced CHP record can support your position in any subsequent PII claim. See GN-PA-06 (Section 3a).

Section 4

Common Mistakes to Avoid

Holding PII at the minimum limit when the firm's project values significantly exceed those thresholds — consider higher limits.
Having an excess that exceeds the RICS maximum permitted level — this is a Rules of Conduct breach.
Failing to notify insurers of potential claims promptly (on a claims-made policy, late notification can prejudice cover).
Not obtaining run-off cover when a firm ceases to trade.
Providing the wrong PII figure in appointment documentation or EOI submissions.
Not having a CHP in place — this is a separate regulatory breach of Appendix A, firm professional obligation 1, and is regularly identified by RICS regulatory visits. The absence of a CHP can also complicate the management of a PII claim.

Section 5

APC Competency & Quick Reference

This topic is relevant to: Business Management (Level 1–2), RICS Rules of Conduct, Risk Management.

What is the minimum limit of indemnity for an RICS-regulated firm with a turnover of £350,000?

The minimum limit of indemnity is £1,000,000. Under RICS Professional indemnity insurance requirements Version 11 (effective 1 July 2025), firms with turnover of £200,001 and above must hold a minimum limit of £1,000,000. The firm should consider whether this is adequate for the scale of its commissions.

What is the maximum uninsured excess for a firm with a £1,000,000 limit of indemnity?

The maximum uninsured excess is 2.5% of the sum insured. For a £1,000,000 limit, this equates to £25,000. For limits up to and including £500,000, the maximum excess is the greater of 2.5% of the sum insured or £10,000.

PII operates on a claims made basis — what does this mean in practice?

It means the policy in force when a claim is made is the relevant policy — not the policy when the work was carried out. This is why continuous cover (including run-off cover after cessation) and prompt notification of circumstances are essential.

What run-off cover is required when an RICS firm ceases to trade?

For consumer claims: a minimum of £1,000,000 in all for six years from cessation. For non-consumer claims: adequate and appropriate run-off, with RICS expecting a minimum of six years. Firms unable to obtain run-off may apply to the RICS Run-off Pool.

What is the relationship between PII and the firm's Complaints Handling Procedure?

Both are mandatory regulatory requirements. A complaint and a PII claim can arise from the same event. A documented CHP showing a professional and timely response to a complaint can support the firm's position if the matter escalates into a formal claim. The absence of a CHP is a separate breach of Appendix A, firm professional obligation 1 of the RICS Rules of Conduct.

Section 6

Pre-Appointment Checklist

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PII policy confirmed as placed with a listed RICS insurer

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Minimum limit of indemnity confirmed against current turnover (Table 1)

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Policy excess confirmed as within RICS maximum permitted level (Table 2)

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Retroactive date confirmed as covering full trading period

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Current PII certificate obtained and filed

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PII certificate attached to or referenced in fee proposals and appointment

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Insurer notification procedure understood for potential claims

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Run-off cover arrangements understood and documented

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CHP in place, meets RICS minimum standard, and communicated to client at appointment stage

Section 7

CPD Learning Outcomes

State the RICS minimum limits of indemnity and maximum uninsured excess requirements from the RICS Professional indemnity insurance requirements Version 11 (1 July 2025).
Explain the claims-made basis of PII and its implications for run-off cover and notification obligations.
Describe the relationship between PII and the firm's CHP, and why both must be in place before commencing services.

Section 8