The letting sector has been subject to much debate of late, with industry bodies calling for the agents to be better regulated to protect landlords and tenants from unscrupulous firms. This has sparked much debate among agents, with opinions firmly split. But very few would disagree that those reputable firms that do voluntarily sign up to self-regulatory schemes, such as The Property Ombudsman (TPO), set themselves apart from rogue agents who do not care about their customers. The same could be said for those firms that take out Professional Indemnity insurance.

All agents should have Client Money Protection, Professional Indemnity and be signed up to a redress scheme.” Lucy Morton W.A. Ellis

“It never ceases to amaze me that the government will not regulate our industry and therefore improve standards, professionalism and put a stop to the rogues. At the very least, all agents should have Client Money rotection (CMP), Professional Indemnity insurance (PI) and sign up to a redress scheme such as The Property Ombudsman (TPO),” said Lucy Morton of prime central London estate agency W.A. Ellis, who has worked with Baroness Hayter on the Property Standards Board.

Having Professional Indemnity insurance is a requirement for Principal, Partner or Director (PPD) members of ARLA, most professional industry bodies insist that their members have indemnity insurance.

Specialist products

A professional indemnity insurance policy can easily be tailored for estate/lettings agents, including cover for claims made to TPO, or arbitration. Natasha Hart, Regional Manager at Endsleigh, says, “We provide cover for a wide range of claims that might be made against you, including negligence, breach of duty of care, infringement of copyright and defamation. We’ll also include claims made to TPO, or arbitration through the NALS as well as a breach of your statutory obligations under Property Misdescription Act 1991, or the Estate Agents Act 1979.

“We can also tailor the policy to reflect the needs of a wide range of agents – from those working at home or in ‘virtual’ offices through to agents with multiple premises.”

Professional Indemnity protects businesses from claims that can damage finances and reputation.” Andy Wynne-Jones HomeLet

Making mistakes is part of human nature. However, when it comes to professional ground, mistakes are punishable in terms of finances. It is therefore important for an individual, when he or she is part of a professional or advisory body, to hold indemnity insurance, especially as annual cover starts from under £100 per year. The insurance can be regarded as a protection against mistakes in the professional world, such as giving incorrect advice, that could otherwise lead to massive fines and compensatory payments.

Andy Wynne-Jones, Head of Underwriting at HomeLet, commented, “Professional Indemnity protects a business from claims made by dissatisfied clients that can damage both its finances and reputation. Businesses may need protection in these litigious times as a mistake which causes financial harm to another can occur in almost any transaction in many professions. Professional Indemnity can provide some peace of mind to estate and letting agents so they can do their job without fear that an error or omission could negatively affect their business.”

It is also worth taking into consideration the fact that a Professional Indemnity insurance policy, in the event of a company being sold or wound down, can still be used to protect the firm up to a six years after trading against any possible claims which may occur whilst the business was in operation. “This is referred to as ‘Run-Off Insurance’,” said Karler Mears of Professional Insurance.

Take your pick

There are many Professional Indemnity insurance providers, including Hiscox, AVIVA, RSA, WR Berkley, Manchester Underwriting, HCC, Catlin, PI Protect, CFC Underwriting, just to name a few. But when selecting a supplier, it is important that an agent selects one that covers a broad range of civil liabilities, offers a claims team that can respond quickly and efficiently, as well as ensure that the wording in the policy is fully compliant with an estate agents regulator.

Mears added, “Estate agents should consider that they have an adequate level of indemnity for their business. This is generally defined by the turnover and contractual sizes that they deal in.

“An example of this would be if you have a regional estate agents dealing locally in say the North of England, where the values of properties may not be as high as in the centre of London and clearly in those circumstances you would need to consider what level of indemnity is required.”

Loss of important documents, acts of negligence, failing to perform the duty with due care creating problems for the client, infringement of the intellectual property rights, compensation for slander or inadvertent libel, are just some of the issues that the indemnity insurance policy should cover against.

Professional Indemnity insurance may not be legally compulsory, but is it really worth running the risk of tremendous financial loss, by not taking out a policy, for the sake of saving from as little as £100 per year?

Contacts

• Endsleigh
  www.endsleigh.co.uk
• HomeLet
  www.homelet.co.uk
• Professional Insurance Agents
  www.professionalinsuranceagents.co.uk
• W.A. Ellis
  www.waellis.co.uk