In this instalment of our ‘Protecting Surveyors’ series, we review the key updates set out in the updated edition of the RICS Guidance Note on Risk, Liability and Insurance and the recent minimum insurance terms update.
This guidance was published in April 2021 in consultation with a working group and became effective as of 1 April 2021. The 2021 Minimum Terms came into effect on 1 May 2021.
What is the main aim of the Guidance Note?
The Guidance Note aims to assist surveyors in understanding when claims may arise and in aiming to prevent them. It sets out the main areas of liability and risk which might be avoidable.
Some of the key observations of the note are:
- Risk awareness – key areas for consideration at the outset of any new instructions are: scope, fee calculation and the appropriate level of liability cap. These should all be outlined in initial engagement letters to avoid any confusion down the line.
- Liability caps, as set out at the outset of any engagement, can assist in limiting the amount which a covered professional can be liable for, should a claim arise. These should be used where legal, to aid professionals in mitigating the risks of their work whilst balancing this against equitable allocation of risk.
- Be aware of the level of coverage required by the firm but also as a RICS member of the firm, and check that it is provided for by the firm’s insurance.
- Ensure that any insurance cover being purchased is in line with the types of work encountered in day to day surveyors’ practice. In all cases this must also be in accordance with the RICS minimum requirements.
- Be alive to third-party reliance and set out in any contractual relations the boundaries of the work ensuring advice is only capable of being relied on by the intended parties.
Changes to PII Minimum policy wordings effective from 1 May 2021: What this means in practice
- More protection for surveyors and an end to blanket fire safety exclusions - The minimum terms provide no scope for the exclusion of claims regarding fire safety for properties which are less than 4 storeys. This should come as a relief to those practices facing difficulties in obtaining cover. For further reading on this point see here.
Further Reading:
For additional reviews of recent developments affecting the surveying profession, please see our previous bulletins in the Protecting Surveyors series here and here.
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