Professional indemnity insurance for new law firms and sole practitioners

Who needs SRA-compliant insurance

The SRA Indemnity Insurance Rules apply to authorised firms: recognised sole practices, recognised bodies and licensed bodies. Each must hold “qualifying insurance” from a participating insurer, on the SRA’s minimum terms and conditions (the MTCs), even if one solicitor runs it. The policy also covers the firm’s principals, former principals and employees, and the SRA’s definition of employee includes a consultant engaged on a contract for services.

The rules don’t apply outside authorised firms:

• Freelance solicitors who do reserved work need “adequate and appropriate” insurance for all their services, with no SRA minimum and no need to use the MTCs. Those doing only non-reserved work have no SRA insurance requirement. Either way, you must tell clients before you start that you aren’t required to hold insurance on the MTCs (Transparency Rules, rule 4.3). See becoming a freelance solicitor.
• In-house solicitors working only for their employer. The SRA’s guidance says it sets no mandatory insurance requirement for them and suggests employers consider directors’ and officers’ cover. Reserved work for the public in a non-commercial body, such as a law centre, is the exception: the body must hold adequate and appropriate insurance (Code of Conduct for Solicitors, paragraph 5.6).

How much cover you need

The minimum sum insured for any one claim is £2 million for a recognised sole practice or a partnership of individuals, and £3 million for a limited company or LLP. Defence costs sit on top, with no monetary limit. There is no aggregate limit, though related claims, such as several arising from one mistake, can count as one.

The minimum isn’t necessarily enough. Firms must also hold cover that is “adequate and appropriate” for their current and past work (rule 3.1), and the SRA’s guidance says that means deciding whether to buy top-up cover. It expects a reasoned assessment based on your clients, the number, type and value of your matters, the probable maximum loss on each type of work and your claims history. You can’t limit your liability to a client below the minimum (rule 3.2).

What the minimum terms require

The MTCs set terms every policy must meet, whatever the insurer’s wording:

• Claims made. The policy covers claims first made, or circumstances first notified, while it runs, whenever the work was done, and can’t exclude work before a set date.
• Wide cover. Civil liability from your legal practice, defence costs, and Legal Ombudsman awards other than fee refunds, with only the exclusions the MTCs list.
• No avoidance. The insurer can’t avoid the policy for misrepresentation or non-disclosure, or refuse a claim for breach of a condition. It can recover from whoever was responsible, to the extent that is just and equitable, so an inaccurate proposal form can still cost you.
• Excess. You and the insurer agree the amount, with no SRA cap. It can’t reduce the sum insured. If you don’t pay a claimant the excess within 30 days, the insurer must, and the policy can let it recover the money from the principals.
• Cyber. Civil liability claims stay covered, which the SRA says includes client money stolen in a cyber attack that you don’t replace. Your own losses aren’t required to be covered; a separate cyber policy deals with those, and an insurer can’t make one a condition of cover.

Buying cover for a new firm

Get a quote before you apply for authorisation. The SRA needs an in-date quote or certificate from a participating insurer, at the right limit, naming the firm exactly as on the application and at Companies House (see how SRA firm authorisation works).

Participating insurers are those that have signed an agreement with the SRA, which publishes the list each year. Most prefer to be approached through a broker. The Law Society says a small firm may need more than one broker to reach them all, but not many, because brokers often reach the same insurers. Compare brokers on the help you would get with a claim, not just on price.

The Law Society says insurers ask about your claims history, risk management, areas of practice and expertise, disciplinary and regulatory history, and ability to meet claims above your cover. It warns that errors in the proposal form, failing to disclose negative information that can be found online, and having no succession plan all reduce your chances. Brokers often check websites, so make sure yours matches the work you describe.

What drives the price

The SRA doesn’t regulate premiums. The MTCs give claims history, categories of work, numbers of principals and employees, and fee income as examples of what insurers price on, so describe your work mix and expected fees accurately.

Property work moves the price most. The Law Society counts conveyancing and commercial work among the areas insurers see as high risk, and says about 40% of claims arrive more than three years after the event, such as a buyer who discovers negligent advice only on selling. An article on the Law Society’s site before the October 2026 renewals said conveyancing still attracts the highest underlying rates, and that firms showing good supervision, file reviews and anti-fraud controls get better terms.

The Law Society Gazette’s March 2026 insurance roundtable described ample insurer capacity, competition on price and only modest increases. It noted that high-value property work is a common reason firms buy top-up cover, and a Law Society PII committee member warned that cutting the premium with a higher excess can bankrupt a firm without much cash if claims come in. For indicative premiums, see how much it costs to start a law firm.

Renewal and the 1 October date

A new firm needs cover before it starts practising, whatever the date. Firms once all renewed on 1 October. That is no longer compulsory, but the Law Society says most firms still renew then, which can make quotes hard to get in the weeks before. Start early, and keep a record of claims from day one, because every renewal asks for it. Most insurers offer extended period policies if you want to move your date.

If you can’t get cover

If a policy expires without a replacement, the old insurer’s cover continues in two stages:

• The extended policy period, up to 30 days, in which you can practise normally.
• The cessation period, ending 90 days after the extended period began. You can work only on existing instructions, and unless you obtain cover backdated to the old policy’s expiry, you must close by the end of it.

Tell the SRA and your insurer in writing within five business days of entering each stage, and again if you find cover (rule 8.1). A firm that keeps practising after the cessation period is uninsured for anything it does from then on, and the Law Society notes that claims against an uninsured firm can be recovered from its principals. If your insurer becomes insolvent, you have four weeks to replace it (rule 5.1).

Run-off cover when you close

When a firm closes, its insurer must provide run-off cover on the minimum terms for six more years, counted from the date the policy would otherwise have ended. Ceasing to be SRA-regulated generally counts as closing.

If your practice merges into or is taken over by another firm, that firm may be a successor practice, for example if it holds itself out as your successor or, for a sole practitioner, if you become one of its principals or employees. Before closing, you can choose run-off on your own policy or cover as a prior practice under the successor’s insurance. If you don’t choose, or don’t pay the premium, the successor’s insurance responds.

The SRA doesn’t regulate the run-off premium and can’t waive it. The Law Society says it is usually about two to three times the last annual premium, so budget for it from the start. Claims can still come after six years, because the Limitation Act 1980 can give a client three years from learning of the damage. A client of a firm that closed more than six years ago without a successor may be able to claim on the Solicitors Indemnity Fund, now run by the SRA.

What’s changed in 2025 and 2026

This guide reflects the SRA Indemnity Insurance Rules in force since 11 April 2025, and on 3 October 2026 the SRA had no open consultation on indemnity insurance. When the rules change, insurers must update policies at the next renewal, or at 18-month intervals (MTC clause 4.10).

One proposal touches run-off. In July 2026 the SRA consulted on requiring some firms that use litigation funding for consumer claims, such as those acting for 500 or more funded claimants, to keep an orderly closure plan covering how they would pay for run-off. The consultation closed on 17 September 2026, and nothing is in force yet. For the rest of the set-up, see the guide to starting a law firm.