Key takeaways
- Surveyors as subject matter experts are potentially exposed to a variety of financial losses that can be protected with professional indemnity insurance
- Some surveyor activities, such as residential and commercial surveying and valuations carry greater risk than others when it comes to potential claims
- Good risk management should be combined with business insurance to safeguard your reputation among clients and industry professionals
Professional indemnity insurance for surveyors
Professional Indemnity (PI) insurance is the most important business insurance for surveyors, providing financial protection in the event of allegations made for professional negligence, errors, or omissions in the course of their services.
Given the complexity and detailed nature of different surveying tasks, ranging from valuations, property inspections, structural surveys, and various reports - the potential for mistakes is signifiant even with good risk management in place.
With ever-increasing requirements for surveyors, imposed by both regulatory bodies and clients, it’s vital to have adequate PI cover to safeguard your business and meet any claims for liability that arise.
Why surveyors need PI insurance?
Surveyors provide expert advice and detailed analyses upon which clients can heavily rely. Professional risks can lead to substantial financial repercussions, potentially resulting in costly legal action made against the surveyor. Example surveyor profesional indemnity insurance claims include:
- Incorrect valuations leading to financial losses
- Failure to detect structural issues or defects during surveys
- Insufficient inspection or negligent assessment of repair costs
- Breach of contract in the procision of your professional service
- Consequential losses can include bodily injury and property damage
- Errors or delays in reporting, causing financial losses or contractual disputes
When dealing with large property values, mistakes can have serious financial consequences. Surveyors professional indemnity insurance can protect yourself against allegations, whether they have merit or not.
By securing PI insurance, surveyors can protect their financial stability and professional reputation, ensuring they can confidently undertake their professional duties.
Royal Institution of Chartered Surveyors (RICS)
Surveyor's are required by the Royal Institution of Chartered Surveyors (RICS) to ensure all previous and current professional work is covered by adequate and appropriate professional indemnity insurance. Firms must demonstrate they meet the requirements of Rules of Conduct for Firms: Rule 9.
We work with a wide range of insurers that can issue policies on a RICS compliant basis
It's worth noting we can also accomodate policy options for chartered surveyors with the Chartered Institute of Building (CIOB), or for non-chartered surveyors. Please contact us on 0345 625 0711 if you would like to discuss further.
Surveyors Professional Indenity Proposal Form
What's typically covered under a PI policy?
A comprehensive PI insurance policy for surveyors usually covers:
- Legal Defence Costs: Expenses incurred when defending against professional negligence claims, including legal fees, court costs, and other associated expenses.
- Compensation: Damages and financial settlements awarded by courts or agreed through arbitration to clients who have suffered a loss due to professional errors or negligence.
- Rectification Costs: Expenses incurred to correct errors, prevent further losses, or mitigate the extent of the damage initially caused by an act, error or omission.
Professional indemnity cover can often be tailored according to the specific needs and risk profile of the surveyor or their practice.
Professional indemnity insurance exclusions
Professional indemnity policies also come with specific exclusions, which surveyors should read and understand. For example:
- Intentional Misconduct or Fraud: Claims arising from deliberate wrongdoing, fraudulent acts, or criminal activities are always excluded.
- Activities Outside Professional Scope: Claims arising from work outside the defined professional scope of services are not covered, highlighting the importance of accurately declaring professional activities to insurers.
- Claims that should be insured elsewhere: For example, a cyber breach would be excluded and should be covered by a cyber insurance policy.
Surveyors should carefully review and understand these exclusions to avoid potential gaps in coverage.
What else do we need to consider?
When arranging PI insurance, surveyors should also thoroughly consider:
- Limits of Liability: Ensuring that the coverage amount is adequate to meet potential claims based on their client portfolio, project sizes, and regulatory or contractual obligations.
- Policy Excess: Determining an appropriate excess amount (the amount payable by the surveyor when making a claim), balancing premium affordability and financial capacity to cover initial claim costs.
- Regulatory and Contractual Requirements: Complying with industry-specific regulations, particularly those mandated by professional bodies such as the Royal Institution of Chartered Surveyors (RICS), which sets minimum insurance requirements for its members.
- Policy Continuity: Regularly reviewing and updating insurance policies to ensure continuous and uninterrupted coverage, even after ceasing professional practice, due to the possibility of retrospective claims.
What surveying activities carry a greater risk of PI claims?
Certain surveying activities inherently involve greater risks and thus attract a higher likelihood of claims:
- Property Valuations: Particularly high-value commercial or residential properties where valuation errors can lead to significant financial losses for clients and third parties.
- Structural Surveys and Building Inspections: The complexity and risk of overlooking hidden defects or structural issues can lead to expensive remedial work and claims.
- Expert Witness and Consultancy Services: These activities often involve disputes and contentious issues, increasing the likelihood of claims against professional advice or evidence provided by the surveyor.
- Specialist Areas: Surveying work in specialised fields, such as environmental impact assessments, party wall agreements, or boundary disputes, also carries heightened risks due to the complexity and potential contentiousness involved.
Surveyors engaged in higher-risk activities should proactively enhance their risk management strategies and ensure their PI coverage limits are appropriately set to safeguard against potential claims.
What other insurance should you consider?
Public liability insurance
If clients or members of the public visit your business premises, or if you visit clients at their premises, it is worth considering public liability insurance. The insurance will provide a legal defence and cover the cost of damages from a client or member of the public that has suffered bodily injury or property damage.
Employers' liability insurance
If your business employ staff, you are required to purchase employers' liability insurance. The insurance will provide a legal defence and cover the cost of damages from an employee that has suffered bodily injury or illness whilst working for you.
About the author
Ryan Nevin is an Account Broker at Get Indemnity™ - he is an ambitious professional who is currently studying towards being a Chartered Insurance Broker.