Brokers Urged to Use Insurance to Solve Dilemma
January 2023: New analysis by Purbeck Personal Guarantee Insurance has found that some solicitors are facing requests for personal guarantees from insurers averaging £180,000 in order to secure their PII cover. Following news that nine UK law firms have collapsed into bankruptcy due to the cost and obligations involved in obtaining professional indemnity insurance (PII), Brokers are being urged to offer Professional Risks Personal Guarantee Insurance to the leaders of Solicitors’ firms, as renewal season approaches.
Some insurers require policyholders to provide personal guarantees for 6 years’ run off cover. This means if the practice closes due to business failure, the insurer can claim against the Practice Partner or Director’s personal estate.
Professional Risks Personal Guarantee Insurance is an annual policy providing cover for the Directors of solicitors’ firms that have given a Personal Guarantee to their insurer for PII run-off cover. The run-off cover is typically 300% of the latest annual PII premium.
Todd Davison, Managing Director of Purbeck Personal Guarantee Insurance said: “A Personal Guarantee has become a requirement of some Solicitors’ Professional Indemnity Insurance products, adding to the problems brokers are facing in securing cover for their clients.
“With rates for Solicitors’ PII cover remaining high and choice of providers limited, we’re urging brokers to consider Professional Risks Personal Guarantee Insurance so that Clients facing the personal guarantee dilemma, have greater peace of mind that their personal assets are protected should their practice fail.”