Conveyancer professional indemnity insurance

   

 

 

Conveyancer professional indemnity insurance is a type of insurance that protects a conveyancing solicitor or conveyancing firm if they make a professional mistake when handling the legal side of buying, selling or transferring a property.

In England and Wales, it is usually called Professional Indemnity Insurance (PII). It is designed to cover claims for financial losses caused by negligence or other civil liability arising from the firm's professional work.

Solicitors Regulation Authority

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What does it cover?

Here are some examples of mistakes it may cover.

1. Missing an important legal issue

For example, a conveyancer fails to identify a restrictive covenant, a problematic right of way or another important issue affecting a property's use, and the client suffers a financial loss.

2. Errors with property title or registration

For example, the conveyancer makes an error when registering the property with HM Land Registry or fails to properly protect the client's legal interest.

3. Mistakes involving a mortgage

For example, the conveyancer fails to comply with a lender's relevant instructions, causing the lender or another party a financial loss.

4. Incorrect advice or failure to carry out checks

For example, the conveyancer gives incorrect legal advice, misses a significant issue revealed by a search, or fails to explain an important legal risk.

5. Financial loss caused by negligence

If a client or lender makes a valid claim because of the conveyancer's professional error, the policy may cover compensation and the costs of defending the claim, subject to its terms.

These are examples of potential claims, not a guarantee that every incident will be covered. The precise policy wording matters.

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What does it not cover?

Professional indemnity insurance does not cover every problem connected with a property purchase.

• Normal property defects: for example, discovering damp or a leaking roof is not automatically a conveyancing negligence claim.

• A buyer changing their mind: it generally does not cover ordinary buyer's remorse.

• Deliberate fraud or dishonesty: these are subject to specific policy rules and exclusions.

• Every complaint or inconvenience: a complaint alone does not necessarily establish an insured claim.

• Losses outside the policy terms: exclusions, limits and other conditions may apply.

  

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Who does it protect?

It primarily protects the conveyancing firm and its insured professionals against eligible claims. It can also benefit clients and lenders by providing a source of compensation where a covered claim is successful.

For most solicitors' firms regulated by the Solicitors Regulation Authority (SRA), professional indemnity insurance is compulsory. The required minimum is generally £2 million or £3 million, depending on the firm's legal structure.

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A simple example

Imagine you buy a house for £250,000. Your conveyancer negligently fails to identify an important legal restriction, and this causes you a financial loss of £30,000.

1. You may be able to bring a negligence claim against the conveyancer.

2. The firm's insurer may cover the claim if the policy applies and liability is established.

3. The insurer may pay the covered compensation and associated costs, subject to the policy terms.

You would not automatically receive £30,000 simply because a mistake occurred; the loss, negligence and applicable cover would need to be assessed.

One important distinction: professional indemnity insurance is different from buildings insurance, which protects against specified damage to the property itself.

For further guidance, see the SRA's professional indemnity insurance guidelines.