Letting agents risk professional ruin if not covered by PI insurance

Midlands based Landlordsure.co.uk, a division of JSW Insurance Services Ltd (JSW), is warning letting agents of the dangers of not carrying Professional Indemnity (PI) insurance – urging them to protect their livelihoods and the livelihoods of their clients by ensuring they are covered.   

Professional Indemnity insurance covers you and your business for costs you may have to pay as compensation to your clients and landlords as a result of allegations of professional negligence or problems with the advice you give. This can be anything from a landlord’s loss of rental income if you fail to vet a tenant properly, to losing confidential documents or data. If a client is not happy with the service you have provided, you could be held liable and your professional reputation and your business could be put at risk.

Nathan Walton, managing director at JSW, explains: “PI insurance is no longer a ‘nice to have’ for letting agents, it is an essential in the UK’s increasingly litigious business environment. For some letting agents, knowing that they are risking financial and professional ruin by not covering themselves is enough for them to obtain PI cover. But there are many more letting agents out there who don’t carry sufficient cover and are putting themselves and their clients at huge risk.”

Having recently expanded Landlordsure.co.uk’s property owner offering, JSW now boasts a complete insurance package designed exclusively for letting agents and estate agents offering lettings. Uniquely, the package can also provide Professional Indemnity (PI) insurance as standard.

It is a compulsory requirement of ARLA (Association of Residential Letting Agents) membership that agents are protected by appropriate PI insurance. ARLA requires members to purchase limit of indemnity of ÂŁ150,000 where fee income is less than ÂŁ150,000. Where the income level exceeds ÂŁ150,000 the minimum limit of indemnity purchased must be ÂŁ500,000.

Nathan warns: “Every letting agent is at risk, even if you are operating within all of the professional and moral guidelines that you should be. The public has become far more aware of their legal rights, particularly with ‘no win, no fee’ arrangements continuously touting for business. This litigious influence on our society leaves all agents exposed.”

Most professional indemnity products for estate agents and letting agents group the two professions together and provide the highest level of cover for all of the risks carried by both. But this means that those specialists that aren’t involved in mortgage lending surveys, and who carry a lower risk as a result, are actually paying higher premiums than they should be.

Nathan continues: “Our new policy is specifically for lettings professionals, which means that the insurance cover and the policy pricing is completely appropriate and therefore very competitive. It protects you against any acts of professional negligence, such as giving incorrect advice (or failing to give advice), breaches of professional duty and confidentiality, employee dishonesty including cover for legal defence costs and any awards made.”
 
In addition, Landlordsure.co.uk will offer members of recognised trade or professional bodies and associations, such as ARLA (The Association of Residential Letting Agents), a discount on their insurance.