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Question Title: Professional Indemnity Insurance
| Question: 281 |
| Do I need to take out professional indemnity insurance for my lettings business ?
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| Answer: |
| There is no legal requirement to have professional indemnity insurance although all businesses should hold public liability insurance. Professional indemnity insurance will cover you against claims for negligence or related matters by aggrieved clients and depending on the type of policy, may also cover your legal costs as well. Unfortunately, such policies are not cheap and the fine print must be read carefully before signing. Cover depends on the size of the business but a small firm (up to £100,000) could easily expect to pay £400-1000 per annum. There are many exclusions and the policyholder will normally have to pay a voluntary excess which typically could amount to the first £1,000 of any claim. Opinions from the professional associations also differ in this respect. The Association of Residential Letting Agents (ARLA) demands that all of its members carry professional indemnity insurance yet the National Association of Estate Agents (NAEA) suggests that for many firms, the cost is an unnecessary expense. The ideal situation is of course to take sufficient care in implementing and drafting your procedures and client agreements such that mistakes do not occur. A well-drafted agency agreement is also essential in making the responsibilities of all parties very clear and indemnifying the agent from carrying excessive liabilities. For the small letting business run by the owner, professional indemnity insurance may not be worth the cost but if your lettings department is only a smaller part of the firm's business and not directly managed by a partner or director, then insurance would be advisable.
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References:
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Pages:
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Hyperlinks:
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Letting Handbook |
Chapters 1 & 17 |
letting-handbook-and-factsheets.html
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For more information, discuss on the Forum
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