Why is professional indemnity insurance for estate agents important?
Estate agents in the UK must be members of an authorised redress scheme and make this clear to their customers. Those schemes have a requirement for estate agencies to hold professional indemnity insurance.
As much as it is a requirement, PI insurance is in fact a very useful cover for any business that provides professional services to their customers. As an estate agent you advise clients on what they should do with their properties, provide certain services to help them secure a sale or a tenant. Those activities can lead to potential disputes with either party if they feel you have failed your professional duty of care.
Often disputes are resolved without going to court for a decision, however, the legal fees to deal with a conflict situation can be still significant. Everybody has heard of injury lawyers but solicitor firms specialising in legal claims against estate agents also exist and they actively encourage unhappy clients to initiate a case against their estate agency.
How does professional indemnity insurance protect estate agents?
The increasingly litigious nature of this industry alone should be a motivation for you to consider this cover and focus on more than just the price. The cost of professional indemnity insurance for estate agents has gone up recently and naturally many business owners are looking to grab the best deal they can.
However, since professional indemnity insurance is a service, it is important you understand who underwrites your cover, what their reputation is with regards to paying claims and how your claim will be handled.
This is what professional indemnity insurance is for - to protect your business against claims of professional mistakes, negligence or breaching duty of care. A legal claim doesn’t just have a financial impact on your bank account. It can also have a profound impact on your personal and business reputation if the local paper gets hold of the story or the unhappy client vents their grievances on social media.
If you choose your professional indemnity insurance provider wisely, you will have an experienced legal team behind you and an insurer who will cover the associated costs including any compensation due. This kind of support goes a long way during a dispute as it can take a considerable amount of time and effort to navigate.
How much PI insurance do estate agents need?
The property ombudsman as well as the scheme of which your business is a member will have specific requirements. Many businesses will adhere to those but there are other considerations when selecting an appropriate limit.
The larger your business and number of clients, the higher the risk of a claim. Remember that sometimes more than one claim can occur within one year and you need to ask yourself whether the limit of your PI policy would be sufficient.
The size of your contracts is also a factor. While you might be limiting your liability in client contracts, you are not immune to claims exceeding this amount. Ensure that the PI limit you select is sufficient for the size of your business.
