Whatever kind of support you need when developing a property, working on a party wall, buying a property or selling one, it makes sense to have a reliable, professional RICS surveyor on your side, someone with the right qualifications, experience… and the right insurance. So which type of insurance policy is essential for a chartered surveyor, and why does it matter to you, the customer?
About professional liability insurance
If your surveyor fails to perform as expected, or causes financial loss thanks to their ‘errors or omissions’, legal action isn’t always covered by a general liability insurance policy. PLI, also called professional indemnity insurance or PII, protects people who provide professional advice and services. It matters to you, the consumer, because it can pay the surveyor’s costs if you think they’ve been negligent and you want to make a negligence claim. It also covers any damages awarded to you, the customer, by the courts. As long as your claim is legally valid, the surveyor will have the funds needed to pay it.
The Royal Institute of Chartered Surveyors recommends all of their members buy specialist professional indemnity insurance through a broker. RICS also recommends minimum levels of indemnity based on the member’s income.
- Turnover of £100,000 or less: £250,000 indemnity limit
- Turnover of £100,001 to £ 200,000: £500,000 indemnity limit
- Turnover of more than £200,000: £ 1M indemnity limit
The premiums surveyors pay depend on the size of the business, the kind of work they do, their claims profile – in other words how often, if at all, they’ve claimed – the number of partners and staff, how experienced they are, and their exposure to higher risk work like surveys and valuations.
What insurable risks does a surveyor face?
Professional work always comes with a risk. Our own profession comes with a suite of typical risks, which filter down to become typical claims. As far as relatively low risks go there’s quantity surveying, estate agency and lettings, planning and development. The medium risk activities we carry out involve building surveys, commercial property management, rent reviews, lease renewals, and architectural design. And the highest risk work for British surveyors, as far as PI claims are concerned, involves project management, plus commercial and residential surveys and valuations.
Can a surveyor operate without PI insurance?
If a surveyor doesn’t have the right amount of professional indemnity insurance they are in serious breach of the regulatory requirements. It’s also really bad business to ignore insurance cover that could potentially save a business from disaster as well as providing peace of mind to their clients. Luckily a surveyor without the right insurance will be shut down, assuming the omission is discovered. It’s always a good idea, as a customer, to check they’ve bought the insurance they’re supposed to have.
What if you have an issue with your surveyor?
If a survey doesn’t reveal all the problems a building is suffering from, your lender isn’t responsible. The type of surveys lenders do are not very detailed, more like a very basic valuation to make sure the property is worth the money they’re lending to you.
RICS isn’t responsible either. But they can and do demand their members have a good, solid complaints procedure in place and an ‘alternative dispute resolution’ provider, for example an ombudsman service, at hand. They can order the RICS member to provide financial compensation and/or take steps to sort out any mistakes, too. If you want to complain about your homebuyer report, ask your surveyor about their complaints handling process.
It’s worth remembering that a homebuyer report involves a visual inspection of the inside and outside of the property but doesn’t look under carpets or floorboards, move furniture, or remove the contents of the roof space. If a problem can’t clearly be seen by the naked eye, it probably won’t appear in your report.
If you want the surveyor to examine both visible defects and any potential problems posed by hidden defects, you need a RICS building survey, highly recommended when the building is big, old, run down, unusual or has been altered in some way. A building survey provides a much more detailed look at the place, including the visual inspection of a wider range of issues involving roof spaces, the land around the property, the floors and all the services.
If you need a reliable, professional Chartered Surveyors London, we’re glad to be your first port of call. And yes, we have all the right insurances!