RICS states that members must hold professional indemnity insurance that meets standards approved by its regulatory board. The requirements are as follows:-
RICS require a minimum of a civil liability policy wording, although a more comprehensive wording is also acceptable.
The cover must be on an “Any One Claim” basis with full retroactive cover, to include past and present employees. If the firm ceases to practice then run off cover must be maintained for a minimum of 6 years.
The policy must have a minimum indemnity limit based on the previous year’s income :-
- For fees of less than £100,000 the minimum required limit is £250,000.
- For fees of between £100,000 and £200,000 the minimum required limit is £500,000.
- For fees in excess of £200,000 the minimum required limit is £1,000,000.
Excess – In addition, the rules impose maximum excesses which will depend on the limit of indemnity. Where the limit of indemnity is less than £500,000, the maximum excess should be no greater than 2.5% of the limit of indemnity or £10,000 whichever is the greater. For indemnity limits over £500,000 then the maximum excess is 2.5% of the limit.
Individual appointments – There are occasions when an individual partner, director or employee is appointed by a client rather than the firm. All policies will, under the definition of Professional Business, include cover for such individual appointments provided any fees are included in the declared fee income of the practice. If there are any differences of opinion as to what is included in the definition of Professional Business then again this is referred to the president of the RICS.