Surveyor Insurance

Surveyor Insurance – Professional Indemnity Insurance

It does not matter what your area of expertise is; as a surveyor, your contributions help make decisions for clients. Such decisions pertain to the status, quantity, and value of their properties or a combination of these three aspects. Surveyors highlight information about structural integrity or any potential issues or risks through detailed inspections and property valuation reports.

Unfortunately, the scope of this work suggests that any mistakes will have major monetary consequences. After the financial crisis in 2008, a spike in claim rates was observed against the surveyors related to home valuations.

Standard surveyors’ Insurance policies are primarily focused on professional negligence coverage combined with accidental injury to third parties and employees, plus associated legal expenses, covering substantiated and frivolous claims.

What is Surveyor Insurance?

Surveyor insurance is a form of business insurance that covers surveyors from the risks they face in their professional work. It gives financial protection if something goes wrong when surveying (for example, providing bad advice, causing damage to property, or dealing with any legal claims).

This type of insurance is often referred to as professional indemnity insurance for surveyors. It helps cover the financial and legal costs of the claims.

How To Distinguish Between Chartered and Non-Chartered Surveyor Insurance?

The Royal Institute of Chartered Surveyors (RICS) is a worldwide regulatory organisation for all Chartered Surveyors. While promoting and regulating the profession, RICS also provides a wealth of information and guidance to its members and the public. Members of the RICS must abide by the “Rules of Conduct”, which include a requirement to arrange a minimum level of professional indemnity insurance with an approved insurer.

Chartered Surveyors

Chartered surveyors’ policies may come at the price of higher premiums. But they generally include full liability cover along with exclusive protections that are not otherwise covered in ‘non-RICS’ policies for surveyors.

Non-Chartered Surveyors

Surveyors who are not chartered can buy RICS-compliant policies. This may reflect as a consideration for individuals looking for higher standards of coverage. Yet, opting for less coverage may mean lower premiums, but one should consider the trade-off between policy coverage.

Why Do You Need Surveyor Insurance?

In the field of surveying, there is a lot that can go wrong. Even the smallest mistake can cause a huge loss. Did you catch that large crack on the wall? Have you double-checked your rent review calculations?

This insurance is a basic need for all surveyors, whether chartered or non-chartered. If something goes wrong, you could find yourself having a very expensive legal battle. This is where surveyor insurance will come in.

The following are the reasons that highlight how crucial this insurance is.

Sense of Reassurance

Surveyors frequently do assessments and give recommendations. So, this insurance can be reassuring as it safeguards you from potential setbacks.

Financial risks related to workplace accidents can be decreased with customised coverage. The coverage is available for non-chartered professionals and in compliance with registered bodies like CIOB and RICS.

Protection Against Risks

This profession carries risks which could be very damaging to both you and your client if anything goes wrong. Errors, no matter how small, can turn out to be big claims.

Your clients may even file a claim of negligence against you and ask you to pay up. Either way, the fact is that you are required to defend yourself, which is expensive and time-consuming.

The surveyors’ insurance pays your legal defence costs and compensates your client as well. Therefore, you run your business without interruption, and perhaps, even in some rare cases, you get to keep your client as well.

Surveyor Insurance: A Legal Requirement

According to RICS, Chartered Surveyors must hold at least the bare minimum of PI insurance coverage. The level of coverage is dependent upon their business scale and turnover. The following is required to stay in compliance with RICS regulations:

• The coverage has to follow the accepted standards.
• It must also take into account the level of business risks and contractual obligations.

Business insurance and RICS Chartered Surveyors are taken very seriously by responsible surveyors. Whether you are a sole trader, subcontractor or company director, you must take out relevant insurance policies. They will protect your interests if the worst were to happen.

Any subcontractors, employees, or consultants hired require written confirmation that their employer or their agency covers them. Otherwise, they will have to buy personal cover, which is not feasible.

Keep Your Business Running Smoothly

There are other business risks, too, apart from potential legal costs. You may even need to insure your expensive specialist equipment, such as PCS and niche surveying equipment.

Without coverage, an equipment breakdown, a legal dispute, an accident, or anything else could lead to costly repairs that eat up your resources.

Additionally, it will halt your operations and can cause delays and lost income. Your business reputation is also affected, as clients will have less confidence in you when you cannot resolve the issues quickly.

A proper insurance ensures your business won’t be disrupted without warning, resulting in smooth functioning.

What Are The Types of Surveyor Insurance?

It is your responsibility to choose a type of company insurance that best suits your needs. You can customise your surveyor’s insurance policy to meet the needs of your company by including any of the following coverage options. The limitations and restrictions of the insurance apply to these coverages.

Professional Indemnity Insurance

This is a liability insurance specifically intended for protecting professionals such as chartered surveyors, quantity surveyors, and building surveyors. It protects against loss resulting from

• Alleged negligence
• Errors
• Omissions
• Breach of professional duty when practising their profession.

Whether you are accused of carelessness, slander, or even property rights infringement, this insurance will provide valuable support for your company.

This insurance can be useful for surveyors in a variety of situations. You might need to defend yourself if a client makes accusations that your work is flawed or that you gave them bad advice.

For instance, before purchase, a building surveyor inspects a 1950s house. The report is completed, but the surveyor did not see any signs of subsidence (shifting foundation). The buyer purchases the home based on the report. The new owner hired an independent engineer six months later. He notices cracks in the walls due to subsidence, which should have been detected in the original survey. Now, the buyer sues the surveyor for professional negligence.

The professional indemnity insurance of the surveyor will provide:

• Solicitor and court fees, as well as legal defence costs

• Compensation payout for repairs and loss of property value.

The surveyor will have to cover these costs without insurance.

The professional indemnity insurance for surveyors covers the following:

• Cover Only For Claims Made

Surveyors’ PI insurance is based on claims, meaning coverage is only available for claims made as long as the policy is in effect. Claims submitted after the policy has been cancelled or expired are omitted. For example, if you had PI insurance in the current year but let it expire at the end of the year, you will not be protected in the next year if a client sues you for giving wrong guidance in the last year.

• Retroactive Dates

The professional indemnity insurance policy normally features a ‘retroactive date’ to facilitate a smooth passage to the next insurer without a gap in cover. If you are changing insurers and don’t have a break between covers, then the beginning date is before your start date of the new policy. RICS’ qualifying insurance is fully retroactive, which means it has no retroactive date.

• Surveyors’ PI Insurance’s Run-Off Coverage

Surveyors still need “run-off” professional indemnity insurance in case they retire or their practice stops during the policy time; RICS surveyors have a maximum 6-year run-off duration. This is crucial because surveyors may be sued for malpractice by clients even after they have passed away, often up to six years after the work was finished.

Public Liability Insurance

Regardless of your field of expertise, surveying efforts typically include interaction with the general public. This can raise the danger, whether you inadvertently damage a contractor’s vehicle on the job site or someone falls over your instrument when you’re conducting a valuation study.

Public liability insurance shields you and your company from unintentional injury and property damage claims from members of the public. If you are in a position that requires you to work in multiple places and with members of the public, this insurance may be very helpful. For example,

• A Measuring tape is stretched across a hallway by a surveyor during a site visit. This can cause a visitor to be injured.
• The surveyor accidentally cracks a glass panel while using surveying equipment, and it falls onto a public member’s car.

Considering these situations, this insurance will provide coverage for

• Medical bills and compensation costs.
• Repair costs of the damaged public property.
• Legal expenses in case of claims

Employer Liability Insurance

This type of cover is designed to assist a business in paying compensation claim fees incurred because of employee injuries or illness resulting from the work. These could be conditions like repetitive strain injury (RSI) from excessive computer work or contracting an illness due to unforeseen hazards encountered on a project site.

Once you start hiring staff, your employer’s liability insurance policy may become legally compulsory.

On a construction site, a junior surveyor falls over some exposed wiring that causes them to injure their back. The liability insurance bears the medical expenses and other compensations.

Cyber Insurance

This insurance covers events of cybercrime and data breaches and covers any associated revenue and fines.

• Data Breach Costs

It covers the legal fees for notifying the customer, credit monitoring, and the PR efforts after the data is exposed.

• Cyber Extortion

The policy may cover the ransom and negotiation costs if the hackers are asking for a ransom (e.g., through ransomware).

• Business Interruption

If your systems are down due to a cyberattack, it will pay for lost income.

• Digital Asset Restoration

It helps in restoring corrupted or deleted files, software and data.

Consider the following situation to help understand how this insurance will provide coverage in case of cyber attacks.

A ransomware attack takes place on a small accounting firm. Client data is locked by hackers, who are demanding £10,000. The firm pays ransom, and IT experts are hired to restore systems. The cyber insurance would protect the ransom, recovery costs, and legal advice that would save the firm from a major financial loss.

Contents Insurance

If you rent or own an office, you want to insure the contents of your office, i.e. the equipment and papers. You can also insure your expensive electrical items in case of breakdown or damage, but it will not include normal wear and tear.

If you go on site visits or work at several places, ‌it also lets you ensure these items while travelling.

For instance, a surveyor’s station and tripod are dropped while transporting equipment to a client site and are damaged beyond repair. The contents & equipment insurance will provide compensation for the cost of replacing the damaged tools to avoid expensive downtime.

Directors’ & Officers’ Insurance

Directors and Officers insurance covers you and your firm against any claims if you are a director, partner or officer of your firm.

Consider the following situation.

A product launched by a mid-sized technology company fails to meet safety standards and is, therefore, recalled. After the incident, some investors sued the company’s board of directors. The directors are accused of not heeding known dangers, failing to oversee issues and exaggerating the product’s readiness in financial disclosures.

Legal proceedings can take years and are complex because of

• regulatory investigation
• legal defence
• possible settlement.

These alleged failures expose the directors to personal liability without protection; they would have to pay for legal costs and damages from their assets.

If you have signed up for this insurance, it will:

• Cover legal defence fees for the directors mentioned in the lawsuit
• Settle costs for the transaction agreed to with the shareholders
• Help in covering regulatory investigation expenses.
• Protect the personal finances of the directors and officers

This coverage guarantees that company leadership can perform their duties without fear of personal financial ruin in case of a claim.

Legal Expenses Insurance

Knowing that you will receive reimbursement for any legal fees you incur could be crucial in a court struggle. That is what legal expenses insurance does. By assisting in the reimbursement of incurred expenses, it guarantees that your company will continue to be financially solid following a judicial proceeding.

Legal expense insurance provides legal advice, representation and court fees in cases involving certain disputes or claims. It can be added to business or personal insurance policies to help ease the financial burden associated with going to court.

It can be applied in certain situations like

• An employee claims unfair dismissal. Legal expense insurance is used by the business to pay solicitor fees and tribunal representation.
• A client refuses to pay for work that has been completed. Legal expense cover allows the business to sue for the debt.
• HMRC begins a formal investigation into a company’s tax returns. Legal expense insurance covers the accountant and legal fees during the process.

Building Insurance

Building insurance covers the costs of repairing the damage caused by flood or fire at your work location. These events are insured, which helps you to get back on your feet.

The standard cover includes a breakdown of equipment that forms part of the building. The repair of your broken boiler and fire, or burglar alarms is included, but wear and tear is not included.

Optional Add-ons Of Surveyor Insurance

Core insurance covers are the minimum insurance covers you need to protect yourself and your business, but you can also tailor the policy to suit your surveying business more by taking on optional add-ons.

Personal Accident Insurance

Personal accident cover pays out if members of your business are injured in an accident while at work.

A complete amount is paid in case of:

• Accidental death
• Partial or total disability due to a workplace accident
• Loss of limbs or sight during an accident

This insurance will pay net weekly earnings for up to 104 weeks if your employee cannot work due to a temporary injury for 7 working days.

Terrorism Insurance

If you have commercial property, the coverage can be extended to cover any damage to the property due to an Act of Terrorism for an additional premium.

Acts of Terrorism involve someone from a terrorist organisation using violence to overthrow or disable the UK government. If this terrorist activity happens within 1 mile of your business and incapacitates you or your employees from accessing your workplace, you will still be covered under this insurance.

Properties situated in England, Wales and Scotland only qualify for terrorism cover. An additional premium will be charged if you require terrorism insurance.

Theft Insurance

In addition to theft of goods in transit, this insurance also covers theft of cash or cheques while you are working at other locations, such as your clients’ homes. For example, a surveyor’s van is broken into at a job site and expensive surveying equipment is stolen. Theft insurance will pay for the replacement of the tools that were stolen.

Business Interruption

Surveyors may have varying working locations. They may work from home, a shared working space, a shop, a client’s premises, or an office. Business interruption insurance covers relocation costs of your workplace if an insured event like a fire or flood makes your working premises unusable.

• It will also cover any lost turnover during the time of that event.
• If you attend a property exhibition, trade event or networking fair that suffers a fire, you’ll be provided compensation for the period during which you were not able to trade there.
• Business interruption insurance also covers any business equipment you may use, like if a laptop or PC is damaged or stolen.
• If you or one of your employees is partially or fully disabled due to business activities, the business interruption policy will cover their insurance.

What’s Not Included In Surveyor Insurance?

The following table shows the conditions in which surveyor insurance is not applied.

• Complaints and situations that you were aware of before obtaining the coverage
• Any work that is not governed by British legislation
• In case of bankruptcy
• Sanctions other than libel
• Information about renting, finance or funding agreements
• Intentional illegal behaviour
• If the fire safety requirements of building materials are not met
• Records of valuation other than verified contractual invoices
• If the surveyor is not qualified or experienced
• It does not cover mistakes made by another firm
• Violation of an agreement, except for duty of care contracts or promissory guarantees

Types of Professions Included in Surveyor Insurance

• Auctioneering – property
• Energy performance certificates
• Estate agency – residential/commercial
• Expert witness
• Letting agency – residential/commercial
• Project coordination
• Project management
• Property management – residential/commercial
• Quantity Surveying
• Rating/rent review – residential/commercial

What Is The Cost Of Surveyor Insurance?

The procedure of rating a RICS firm or any other professional indemnity risk is intricate. Your premium is determined by numerous factors, including:

• Size of business (revenue from fees)
• The nature of the work being done
• Experience
• Background of claims
• Number of employees

Frequently Asked Questions

Does PI insurance need to be purchased by quantity surveyors?

Quantity surveyors will find professional indemnity (PI) insurance worth having because their job is to assess and advise on construction projects.

The success (including profitability) of the projects you work on is directly related to your recommendations. For this reason, you may be sued for breach of duty or negligence if your evaluations are blamed for losses by clients or contractors.

Quantity surveyors can receive support from PI insurance in the defence or settlement of a legal case.

Is the survey and valuation work covered in this insurance?

Indeed. However, because insurers view it as somewhat riskier than other surveying tasks, your premium is a little higher.

The problem is that many homes have been sold at a loss since 2007. It indicates that the surveyors have accepted responsibility for the lenders’ financial losses.

For this reason, even if you no longer perform valuation work, insurers want to see everything before approval.

What amount of professional indemnity insurance do I need?

You should start with your firm’s turnover. The type of insurance and its scope must be suitable and sufficient. Even though RICS’s statement is a little ambiguous, it does at least offer minimum coverage levels.

Additionally, RICS suggests that since the policy covers civil matters instead of negligence, your coverage should be “every claim” (or claims) and “full civil liability” (or liabilities).

You cannot have too much coverage for this reason. It can cost millions of pounds to protect yourself before receiving a bill for reimbursement. Better to be safe than sorry and get as much as you can easily afford.

Which survey-related tasks are deemed high risk?

There are risks associated with all professional jobs, and the surveying industry is no exception. The risks could differ greatly depending on the region in which one works. The locations where the majority of your professional indemnity disputes take place in your line of work are listed below.

• Low-risk jobs include development, design, estate administration and leases, and surveying of quantities.
• Graphic design, construction surveys, rent reviews, lease renewals, and commercial management of properties are all regarded as moderately hazardous.
• Managing projects, home surveys and values, and corporate surveys and assessments are examples of highly hazardous work.

What kind of services are provided for insurance claims in case of subsidence, flood or fire?

In the event of a subsidence, flood, or fire, the following services are typically offered:

• Initial building assessment and report for the insurer
• Temporary works (e.g., boarding, propping, site security)
• Preparation of specifications and a schedule of works
• Issuing and evaluating competitive tenders
• Full project management of repair and reinstatement works

What is the importance of professional indemnity insurance for surveyors?

Surveyors need this insurance to protect themselves from claims of negligence or errors by their clients. Additionally, insurance of this kind is required to comply with the regulations set out by professional bodies, such as RICS. Professional indemnity insurance covers both clients and surveyors as it can involve potentially high costs of incorrect estimations or advice. Consequently, it makes sense that surveyors typically have somewhat higher PI insurance premiums than those of other professions.

Is run-off insurance necessary for a surveyor LLP?

Although it’s not necessary, every surveyor who has been in business and has professional indemnity insurance should give this careful thought if they decide to stop. This is because surveyors may be sued for up to six years following completion of the work. When they stop trading, RICS surveyors must have adequate runoff insurance.

What is the recommended duration of indemnity insurance for surveyors?

A surveyor who has stopped working should keep indemnity insurance for at least six years after stopping work as a fundamental defence against past claims. The RICS suggests six years for the associate members.

How would you describe the Assigned Risks Pool (ARP)?

It is a facility of  RICS which offers short-term coverage for firms that cannot obtain compliant professional indemnity insurance from the open market. Firms may not be able to get PI insurance for several reasons. Usually, no company is ready for their insurance because they are high-risk.

Is insurance necessary for self-employed surveyors?

It is true that all surveying businesses, whether they are limited companies, self-employed (sole traders), or huge or small businesses, have hazards and hence require insurance.

Insurance can be especially beneficial for self-employed surveyors as it safeguards their capacity to continue trading. Additionally, it generates revenue while insurance firms handle disputes for them.

What is a quantity surveyor’s insurance?

Quantity surveyors’ insurance protects professionals who provide clients with specialist cost and budget advice on construction and engineering projects. It shields surveyors against claims due to errors, omissions, or flaws in their estimates and forecasts, which lead to financial loss.

How does a surveyor’s insurance offer support during day-to-day claims?

It offers support by playing a part in the following tasks and duties:

• Guiding in the notification process and offering support in notifications to insurers.
• Managing the management of legal costs and making sure that insurers’ reserving policies are implemented commercially.
• Assistance on draft responses to claimants
• Ensuring the use of preferred law firms.

What is land surveying insurance?

Land surveying insurance covers risks surveyors face through their core services, like:

• Land, ground and aerial surveys: Assessing geography, contours, features, etc.
• Property structural surveys: Evaluating conditions and defects ahead of sales.
• Land valuations: Judging land or site values before purchase or development.
• Mapping and data presentation: Conveying analysis through maps, charts, etc.

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