Estate and Letting Agents Guide To Professional Indemnity Insurance

keyring with a front door key attached  Running a successful estate and letting agency is far from simple. Both buyers and sellers rightly expect you to be the expert, and more often than not you will be.

But nobody is perfect and even the most diligent property agent is not beyond making expensive mistakes.

For a competitive quotation either complete a Quote Request form or call us on 0345 251 4000.

Fortunately, there are ways you can cover your business from any mishaps that you might have by taking out professional indemnity insurance. Here we look at what professional indemnity insurance is and why your business needs it.

How much does it cost?

Rates for estate and letting agents professional indemnity insurance typically range between 0.15% and 0.5% of turnover, depending on the usual risk factors and market competition. Rates can of course be higher or lower than this depending on the work undertaken, the claims history etc. Rates are discounted for new start firms as there is no history or legacy to insure. 

You should also bear in mind that minimum premiums will also apply which can vary considerably between insurers.  For example, a minimum premium could be £ 100 or £ 250, depending on the insurer selected. The minimum premium is the insurance company's starting premium for insuring any risk.

Why do we need professional indemnity insurance?

Of course, no estate or letting agent ever intends to give bad advice. But unfortunately, mistakes can happen every now and again.

Disgruntled clients – whether they are sellers, buyers, landlords or tenants – can feel so strongly that they may take legal action against your firm in a bid to claim for compensation, lodge a complaint to a property ombudsman, your professional body, or even to the local press.

A recent survey from Deloitte showed that 41 per cent of respondents who had experienced a reputation risk event reported loss of revenue as having the biggest impact on their business. So it’s essential that every precaution is taken to protect the financial health of your business, should you make any costly errors. This means taking out a professional indemnity insurance policy to ensure that you are not left to foot the bill for any legal expenses (which can run into the thousands of pounds) that you may have to deal with.

Female estate agent outside new houseWhere can we buy professional indemnity insurance?

Most firms use an insurance broker to organise their PI insurance - a good broker lowers the premium cost as well as providing valuable advice and support throughout the insurance period, especially on claims. We provide a full broker service so for a quotation or some free advice please contact us.

If your fee income is less than £ 100,000 you may be able to buy online using a quote and buy system. However, the cover provided may be very basic or not suitable for your business.

You may also find the following guide helpful: Why You Need An Insurance Broker. 

Underpinning your reputation

There is also a growing focus on the professionalism of estate agencies – with many calling for licensing of sales and letting agents, as well as a constant stream of criticism of ‘rogue agents’ in the media. Indeed, many renters now expect their letting agents to be a member of a professional body such as the NAEA or the RICS – both of which require professional indemnity insurance to become a member. In addition to this, all agents need to belong to an independent redress scheme, such as The Property Ombudsman – which again requires that the agent has professional indemnity insurance to join.

What's covered?

Although professional indemnity insurance is incredibly important to both the reputation and financial health of any estate and letting agent, you need to be sure that the policy you’re taking out is a comprehensive one.

A comprehensive professional indemnity insurance policy should cover you for:

  • Compensation for awards made by The Property Ombudsman and The National Approved Letting Scheme
  • Consumer Protection from Unfair Trading Regulations 2008
  • Defence costs, such as lawyers, experts and other court costs. These are payable in addition to the policy limit
  • Claims made against you due to any civil liability
  • Compensation up to the chosen policy limit
  • Claims made against you caused by loss of or damage to documents
  • Data protection defence costs

So before you sign on any dotted line make sure your policy meets the requirements of major Estate and Letting Agent professional bodies such as the National Association of Estate Agents (NAEA) and the Association of Residential Letting Agents (ARLA).

Examples of claims 

Aerial shot of farm land ESTATE AGENTS

It was alleged that the agent undersold a property. Five months later it was resold for double the previous price. Amount Paid £ 200,000

An employee of the business altered the amounts and wordings of cheques, enabling him to obtain the proceeds. Amount Paid £ 50,000

The agent advised a client to sell a farm by auction. The client later alleged that a higher price could have been obtained if the land and buildings had been sold separately. Amount Paid £ 45,000

A property was put up for sale by the agent but it was alleged that this had not been requested. Amount Paid £ 40,000

The agent valued a client's house in excess of £ 500,000 and it was subsequently put on the market. In anticipation of a quick sale, the client purchased two properties. The house was overvalued, however, and after a long delay was sold for a substantially lower price. A claim was brought for the cost of bridging finance and other expenses incurred as a result. Amount Paid £ 30,000


An agent was retained to negotiate a rent review but failed to agree an early figure. Tenants had to pay higher rent. Amount Paid £ 700,000

A notice to quit was served on the tenant of a farm. The firm failed to serve a counter-notice under the Agriculture (Miscellaneous Provisions) Act 1976 within the time limit. Amount Paid £ 75,000

The insured was managing a client's property and replaced a clay roof with concrete tiles. Because the property was a listed building, planning permission should have been obtained. The local authority required that the clay tiles be refitted. Amount Paid £ 20,000


This guidance note is intended for information purposes only. Whilst all care has been taken to ensure the accuracy of the guidance note it is not to be regarded as a substitute for specific advice. This guidance note shall not be reproduced in any form without our prior permission.  © Professional Indemnity Insurance Brokers Ltd