Do I need professional indemnity insurance if I work as a locum?
This is a question often asked by potential locums is how on earth they keep themselves safe as locums with insurance and how do they go about getting it. I have heard a few horror stories about locums who have gone through brokers and taken out professional indemnity insurance for thousands of pounds, because they have felt they needed to or have wrongly read advice on the Law Society page or SRA website telling them that this was essential.
PII is unnecessary
The key answer to this question is simply that 99.9% of locums are covered by the company or firm they work for. We rarely come across engagements that require PII cover, and in the last five years it has perhaps arisen once in a situation where an in house locum was asked to provide evidence of PII cover.
This situation is a little bit different in larger organisations who impose IR35 issues and require their consultants and locums to work via a separate limited company or to be in-house under PAYE, but generally the rule of thumb is that if you are locuming for a law firm or an in-house department you don’t need your professional indemnity insurance and the overwhelming majority of the 1,200 plus locums listed with us do not have any professional indemnity insurance. Sometimes it can be a policy requirement of a company that has no justification, but has been implemented across the board for all consultants of any type to have PII in place. For example, our transcription company very often gets asked to provide evidence of our PII cover (£5 million) on contracts that are written for consultancy services, and I would imagine anyone providing legal consultancy work to the same organisations would be expected to complete the same agreement.
Is your PII necessary?
There has been recent debate about whether some law firms need the full cover of professional indemnity insurance at the fairly punitive levels currently seen, or whether in future it may be possible to separate out non-regulated work from regulated in order to provide a service that’s cheaper to operate.
Locums – Business to Business
Locums should not forget that they are usually operating in a business to business relationship, so it is the firm who are contracting with the firm’s clients, not the locum. The locum is providing services to the firm. In any situation the clients will be taking action against the firm and not against the locum.
The vast majority of PII policies I have seen for law firms cover the locum. Some firms will actually run the name, CV and practising certificate of the locum past their broker in order to get permission or give prior notice.
Locum PII Cover
There is one professional indemnity insurance provider out there who will insure locums for professional indemnity insurance cover at a very reasonable rate, but you do have to describe yourself as a consultant lawyer rather than a solicitor and I understand that it will only cover business to business arrangements on a non-liability basis. Our experience of this particular company is that they provide cover for somewhere in the region of about £600 a year. If you’d like the name of this broker please drop us a line and we’d be happy to send this over. We don’t know about the quality of their insurance, although we do know of at least one locum who has used them.
You shouldn’t need professional indemnity insurance in order to undertake locum or consultancy work, but always worth double checking when starting an assignment to make sure you are covered by a firm’s policy.