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What indemnity insurance do solicitors need by law?
There is no legal requirement for solicitors to hold professional indemnity insurance, however it is a regulatory requirement for the vast majority of practicing firms. This requirement is set by the SRA—the Solicitors Regulation Authority, which is responsible for ensuring that standards and codes of practice are met across the industry.
Tables of Contents
What indemnity insurance does the SRA require authorised solicitors to have?
Does a consultant solicitor need their own legal professional indemnity insurance?
Do in house solicitors need professional indemnity insurance?
What does solicitors professional indemnity insurance cover?
Why do solicitors need professional indemnity insurance?
Like any professional, solicitors provide everyday people and businesses with advice based on their area of expertise. Anyone advising from a position of expertise holds a duty of care towards their clientele, to ensure that the advice being given is correct and not negligent or likely to result in undue damage to their clients or others.
Solicitors must be especially wary given that their work often brings them into contentious or emotionally charged situations with the potential for significant gains or losses for their clients. As such, a professional indemnity policy that covers and protects against allegations of negligence whether justified or not serves as a welcome safety feature and one which may ultimately save a business from closure. Finally, the majority of solicitors are likely to require certain levels of professional indemnity insurance as a condition of their SRA membership.
What indemnity insurance does the SRA require authorised solicitors to have?
The SRA mandates that all authorized firms maintain Professional Indemnity Insurance (PII) that meets its Minimum Terms and Conditions (MTC). While the core limits remain £2,000,000 (or £3,000,000 for LLPs) with unlimited defense costs, a significant regulatory update was finalized in late 2021 and is strictly enforced in 2026: the 'Cyber Clause.'
This amendment explicitly requires PII policies to cover civil liability for client or third-party losses resulting from a cyber-attack (such as the theft of client funds). However, this compulsory cover does not include 'first-party' losses (e.g., the firm's own lost revenue or data recovery costs), which the SRA now strongly advises firms to cover via a separate, standalone cyber insurance policy.
- Full Civil Liability cover at mandatory minimum levels of £2,000,000 per claim for sole practitioners and partnerships, or £3,000,000 per claim for LLPs, incorporated practices, and licensed bodies.
- Explicit Cyber Liability inclusion for third-party losses. Since 2021/2022, the SRA MTC must clearly cover civil liability arising from a "cyber act" (such as a hack or data breach affecting client funds), though firms are strongly advised to purchase separate "first-party" cyber insurance for their own business recovery costs.
- Unlimited defence costs payable in addition to the primary claim limit, ensuring legal representation does not erode the compensation available to the claimant.
- Highly regulated "Minimum Terms and Conditions" (MTC) that restrict insurers from avoiding or repudiating a policy on grounds of non-disclosure or misrepresentation, ensuring continuous consumer protection.
Full minimum terms and conditions for SRA authorised firms is available here.
These terms differ significantly for freelance solicitors. While they are not bound by the MTC, they must hold 'adequate and appropriate' insurance if they provide reserved legal services (such as litigation or probate). In 2026, the SRA defines 'adequate' based on a documented risk assessment of the solicitor’s specific practice. For those handling reserved activities, a minimum indemnity limit of £500,000 is now the market baseline, though solicitors must be able to demonstrate to the SRA that this limit is sufficient for their specific client profiles and potential maximum loss scenarios.
Does a consultant solicitor need their own legal professional indemnity insurance?
Under the 2026 consultancy model, consultants operating via an SRA-authorized firm are typically covered by that firm's MTC-compliant policy. However, the rise of independent 'freelance' solicitors has created a distinct insurance tier. If you are a freelance solicitor providing reserved services, you must purchase your own PII. Unlike traditional firms, you are not mandated to provide six years of 'run-off' cover if you close your practice, though the SRA and the Law Society now heavily emphasize that doing so is a matter of professional conduct to protect your personal assets and former clients from future claims.
Do in-house solicitors need professional indemnity insurance?
In-house solicitors do not need PII in their own name, however, their employer has a responsibility to ensure that in-house solicitors are covered on the overall PI insurance policy for the business. This does not need to be an SRA compliant policy unless the company itself is subject to SRA regulation.
What does solicitors professional indemnity insurance cover?
Aside from alleged professional negligence, solicitors professional indemnity will also cover any civil liability claims, regulatory authority awards and legal defence costs. The coverage is broad by design and through collaboration with insurers by the SRA in order to provide a useful and comprehensive protective measure.
Can a solicitor provide advice without indemnity insurance?
Yes, although even if exempt from SRA requirements anyone who provides professional services or advice can be claimed against in the event that their services have cost a third party, through negligence or breach of civil liability. So whilst it’s possible to advise without PI insurance in place, it is not recommended.