Choosing a limit of indemnity can be a difficult process, as you will have to assess what the potential maximum loss that anyone using your services could suffer, compared with the likelihood of that level of loss ever occurring. The RTPI has requirements for its members to carry certain limits of indemnity, and maximum levels of excess, based upon the amount of annual fee income generated by the Practice.
These are detailed below or click here to visit the insurance centre created by Perkins Slade for RTPI members for more information:-
Whilst a useful guideline, these cannot be relied upon to ensure that you will be adequately protected in the event of a claim as, not only do you need to consider likely damages awards, but also the legal costs incurred in defending the claim in the first place and any legal costs that may be awarded against you, if you are found to be at fault.
In a worst case scenario, if someone suffers not only financial losses but also bodily injury or damage to property as a result of following alleged negligent advice, the potential costs can run into millions of pounds.
In addition, you may also find that your own Clients will require you to carry a minimum limit of indemnity under your terms of appointment with them. This can sometimes be disproportionate to the amount or type of work that you would be undertaking for them. It is not uncommon for Local Planning Authorities to require self-employed planning consultants to carry a limit of £2m or more, which often does not take into account the nature of the work being done.
Given the type of issues detailed above, and the fact that premiums for higher limits do not increase in proportion with the increase in cover (a £2m limit will not cost twice as a much as a £1m limit), the best advice is to buy as much cover as you can reasonably afford.
For more information visit PS-insurance-hub.
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