MPR offers Professional Indemnity (PI) insurance to Property Professionals and Surveyors to protect against damages and defence costs arising from their professional services.
The PI insurance policy addresses the spectrum of risks and dangers that Property Professionals and Surveyors face when carrying out their professional business activities. It provides comprehensive cover, incorporating design developments to accommodate many of the newly emerging litigation trends and themes, to meet the needs of organisations that provide professional services in the property sector.
Why do your clients need PI insurance?
- PI cover is compulsory for all members of the Royal Institute of Chartered Surveyors (RICS), and many professional bodies in the property sector require PI to be purchased by their members or emphasise the importance of maintaining PI insurance.
- Regardless of compulsory requirements, all professional service firms owe a duty of care to third parties. This, coupled with an increased awareness of legal rights and remedies, means that protecting the assets and reputation of an organisation is very important.
- Even the most experienced and respected firms are not immune from making mistakes and protection is required from third party claims alleging negligence, and other legal liabilities.
- Property professionals may also find themselves embroiled in a claim even when they may have done nothing wrong, particularly on contracts with multiple parties. Disputes can quickly intensify, leading to escalating defence and settlement costs.
- Protection is in the interests of both the professional firm and their clients. Evidencing a good quality insurance product is important and may even be a marketing advantage when competing for contracts.
What does the policy cover?
- The purpose is to insure an organisation for defence costs and legal liability arising out of their business activities including, but not limited to, liability for:
- breach of professional duty;
- any form of defamation;
- intellectual property infringement.
- Also, to insure them for costs incurred in:
- investigations into them by regulators and other authorities;
- defending a criminal proceeding;
- ombudsman awards;
- replacing or restoring documents.
- The policy will also provide mitigation costs, which are designed to rectify any wrongful acts before they result in a claim against an organisation.
What limits are available?
Up to £10 million for any one claim.
What does an underwriter like to see?
- Financially sound organisations with good qualifications and experience.
- Established businesses that have been operating for more than three years.
- Total contract values comparable to the size of the organisation.
- Lower property/building values in relation to property management/valuation work.
- Limited use of sub-contractors.
- UK or European based organisations.
Is there anything an underwriter wouldn’t insure?
- Some property activity is exposed to more risk. Underwriters exercise a more cautious approach to activities in higher risk industry sectors.
- Underwriters are also more cautious of businesses with higher risk surveying activity (hazardous materials, mineral, hydrographic) or those with a higher exposure to third party bodily injury or property damage.
- MPR will not insure firms with an exposure (current or historical) to valuations for lending purposes.
Why choose MPR?
- Deep experience over many years in all the products we underwrite
- Simple and clearly stated policy language with the removal of ambiguity
- A straightforward, broker focussed, technical and service based proposition
- Strong financial rating
Features
- RICs Minimum Terms and Conditions (MTC)
- The Royal Institute of Chartered Surveyors sets the MTC for the level of PI required for their members and the MPR policy has a condition that allows these to take precedence over any terms, conditions and exclusions less favourable to the insured organisation. However, the policy is written in MPR’s own format and contains benefits not offered by many insurers, who simply adhere to the MTC.
- Better than RICS MTC (1) Mitigation Costs
- Quite often, a speedy response and sensible resolution can prevent a problem from escalating into a costly claim. Having mitigation costs (including fee dispute settlement) allows the insurer to work quickly in a time of need to ensure that the situation is rectified with minimal damage.
- Better than RICS MTC (2) No Insolvency Exclusion
- An insolvency exclusion is a feature in some policy forms. If an insured organisation enters a bankruptcy or insolvency proceeding, the PI cover will continue until the end of the policy period (for wrongful acts occurring before the insolvency).
- Better than RICS MTC (3) no limitation on Collateral Warranty Assignments
- Common in the property and construction world, collateral warranties carry obligations to additional third parties (beyond the original client), ensuring duties have been fulfilled to professional standards. It is important the insurer recognises these are not to be treated in the same way as other contractual terms and also does not limit the amount of times they can be assigned.
- Better than RICS MTC (4) 100% of costs paid for Investigation and criminal proceedings
- Many insurers follow the RICS MTC and only offer 80% of the costs and expenses of proceedings or legal representation costs (with the insured picking up the other 20%). MPR offer 100%, so the insured is not left footing part of the bill.
- Deductible not applicable to defence costs
- Property professionals can become entangled in problems on contracts, particularly where there are multiple parties involved. Allegations will need to be defended, and having access to claims and legal experts is important. This allows the business to continue as usual, with the peace of mind of knowing that they won’t be out of pocket unless, and until, there is a settlement.
- Ombudsman awards
- When complaints occur, organisations can also be examined by an ombudsman with the power to issue compensatory awards. The insured organisation has the protection for any awards or additional costs made by any ombudsman (provided it comes from a claim arising out of their business activity).
- No cyber exclusions in the policy
- Particularly relevant to the property and construction industry with the increasing use of Business Information Modelling (BIM). BIM uses a single system of computer models for all parties and is intended to offer savings in cost and time, as well as greater accuracy in estimation, and reduction of errors, alterations and rework. Cyber exclusions can create ambiguity should a PI claim arise.
- Free trouble-shooting legal advice
- The policy provides direct access to an award-winning law-firm (specialising in PI Insurance) for 60 minutes of free consultation on each separate PI related matter. It doesn’t have to be a potential claim, it could just be a situation that needs some assistance. This access to partner level advice doesn’t constitute notification to the insurer, so the policyholder will have peace of mind that it will not be regarded as a claim or circumstance.
- Previous policy cover option
- Moving PI insurance carrier is a lot easier than it used to be. Whilst there has never been any obvious impediment to switching to a stronger product offering, bewildering use of jargon and statements of product capability can nonetheless create some room for doubt. Allowing a ‘look back’ provision in a policy permits a previous policy to be used to interpret a claim made on a superseding form. It is a far from perfect science, but it can provide some comfort where it is required.
What can go wrong?
A quantity surveying firm was appointed on a retail redevelopment project to provide consultancy and cost calculations with the aim of minimising the potential project overspend, whist still achieving the required standards of quality. Unfortunately, mistakes were made leading to an under-estimate of materials required.
A typical error for a quantity surveyor and one that can have knock-on effects. The miscalculation meant that there was insufficient cash flow for the next stage of the project and work ground to a halt while the project manager began the process of additional funding. Thankfully, this was quickly secured, but a claim was brought against the quantity surveyor and settled for £50,000, plus £25,000 defence costs.
A property manager was responsible for the maintenance of the communal area of a block of flats. Two of the residents had contacted the insured organisation to complain of a broken front door step. Due to a busy holiday season the property manager failed to instruct the repairs and a tenant subsequently tripped and broke their ankle.
There are often cross-overs with public liability and professional indemnity, particularly with property managers and their responsibilities around personal injury. In this instance it was decided that the property manager had not taken reasonable steps to avert the accident despite having considerable time to do so at minimal expense, and the injury was a direct result of their negligence.
The tenant sued for personal injury citing pain, physical suffering and emotional distress. The claim settled for £15,000.
An estate agent advertised and assisted in the sale of a 5-bedroom property for £950,000. Following the sale, the purchaser discovered that the 5th bedroom (a converted attic) did not have building regulation approval (to be classified as a bedroom at least half of the ceiling must be at least 7 feet tall).
The Property Misdescriptions Act (1991) clearly states the need to provide accurate property descriptions and the duty of care owed by agents as ‘property professionals’. In this case the purchaser’s solicitors brought a claim of misrepresentation against the estate agent and were looking for substantial costs so that the attic could undergo significant modification to be officially signed off.
The total cost was comfortably over 5 figures.
