Flashcards in Policy Documents Deck (22)
What is the purpose of RICS policy documents?
Set out the rules and procedures which govern RICS regulation
What are some key RICS policy documents?
RICS Guide - Professional indemnity insurance requirements (2019)
Rules for registration of firms
RICS professional and ethical standards
Complaints handling procedures
What is the purpose of PII?
To protect firms from financial loss in the event of a negligence claim and consequences to pay third party damages
To protect clients from financial losses which the firm cannot meet
Mandatory for surveyors and firms working in practice
Under which rule of the RICS ROC for firms does PII come under?
Rule 9 of the Rules of Conduct for Firms - Firms must have adequate PII cover under RICS
What if the minimum level of indemnity based on?
Based on the firms turnover in the previous year
What must the PII include / cover?
On an each and every claim basis / fully retroactive (covers claims made during insurance cover period irrespective of when original act occurred)
Include the RICS minimum policy wording
Provides a minimum level of indemnity based on turnover
Provides a maximum level of uninsured excess
Underwritten by a RICS approved insurer
Covers past and present employees
Includes run-off cover when a firm or member ceases to trade
What are the minimum levels of indemnity based on firm turnover?
Firm turnover < £100k = min. level of indemnity £250k
Firm turnover £101k-£200k = min. level of indemnity £500k
Firm turnover >£201k = min. level of indemnity £1m
What are the maximum uninsured excess levels based on limits of indemnity?
Limit of indemnity £500k = 2.5% of sum insured
What is Run-Off Cover and what is the minimum duration?
To ensure firms, members and their customers are still covered in period following a firm ceasing to trade
The minimum run off cover is 6 years
What is the required run-off cover for consumers?
Required limit of £1m for a period of 6 years from expiry date of the policy in force at the time of cessation
What is the Run-Off Pool?
Firms that are unable to obtain run-off from their incumbent insurer / the open market = able to apply for coverage to the Run-off Pool
What is the difference between a liability cap and a firm’s PII limit?
PII limit = set out in firm’s PII policy and is fixed on the annual PII renewal; it is the maximum amount insurers will pay in any particular claim
Liability cap = agreement between a member and their client, fixed when they enter into valuation engagement
What should you do if a PI Claim is made against you?
Notify the insurer immediately - if necessary they can give advice on how to proceed
Does PII cover work for charities, friends and pro bono (unpaid) work?
If you are a qualified surveyor employed in a firm you must obtain agreement from employer to carry out such work (they may or may not agree)
If they don’t agree - you will need your own PII insurance
If they do agree - they must obtain specific agreement of their insurer to provide this cover
What if you are retiring / conducting part-time work?
If you're a member who has retired / ceased trading, RICS require you to maintain PII run-off cover for 15 years
The firm’s PII should cover part time employees as with normal employees
What is an Assigned Risk Pool (ARP)?
A facility for Regulated Firms who find themselves unable to obtain insurance in normal market (where they do not comply)
ARP = underwritten by all RICS Listed Insurers
Aim of ARP = make a Regulated Firm an insurable risk again in the normal market
Firms can remain in ARP for a max 3 years during which they are audited and guided in how to amend business procedures/practices
Membership = subject to compliance with the terms and conditions of entry
The ARP is managed on behalf of RICS by Miller Insurance Services
What is Vicarious Liability?
Dictates that an employer is responsible for negligent acts / omissions of his employees when acting in the course of their employment
But this does not remove employee’s potential liability
Although the employee may not have a contractual obligation to client, he will incur a direct liability to client in Tort
What happens when a duty of care is breached?
When a duty of care is breached = LOSS = DAMAGES = NEGLIGENCE CLAIM
What is Investland's PII Policy?
Investland does not have this, but it does have a Management Liability Insurance cover
Differs from PII where PII covers the ‘activities’ of a business whereas Management Liability Insurance covers the ‘running’ of a business and covers against 'mismanagement' for losses sustained by third parties
o Investland MLI covers (for 1 year);
What does the Investland MLI cover?
Directors and Officers Liability - £2m
Corporate Legal Liability - £1m
Employment Practices Liability - £500k
Benefit Plan Liability - £25k
Employee Crime - £25k
Kidnap and Extortion Expenses - £25k
Cyber Liability and Incident Response Expenses - £25k
What is a Non-Disclosure Agreement?
A Confidentiality Agreement / secrecy agreement and a legal contract between at least two parties outlining confidential material, knowledge, or information that the parties wish to share with one another for certain purposes, but wish to restrict access to or by third parties