Architects: Think Twice Before Accepting an 18-Month PI Insurance Policy
In an increasingly regulated landscape, Professional Indemnity (PI) insurance is not just a financial safeguard—it's a compliance requirement. While 18-month PI policies may appear to offer flexibility or cost-efficiency, architects should be cautious before committing.
At LBH Insurance, we regularly advise professionals in the built environment on the regulatory risks that can arise from non-standard PI policies. Here's what you need to consider if you're presented with an 18-month PI insurance term.
1. Annualised Indemnity Limits
The issue:
Many regulators, such as the RICS (Royal Institution of Chartered Surveyors) and ICAEW, expect policies to provide annual indemnity limits (e.g. £1 million per year).
The risk with 18-month policies:
Some extended-term policies offer a single aggregate limit over the full 18 months, rather than resetting annually. This could leave you underinsured during the second half of the policy term.
Why it matters:
This structure may not meet the standards set by your regulator, exposing you to compliance issues—and more importantly, leaving your business financially vulnerable.
2. Minimum Terms and Conditions
RICS Requirements:
PI insurance must follow the RICS Approved Minimum Policy Wording
Policies must be issued by a RICS-Listed Insurer
Typically structured around a 12-month term
ICAEW Regulations:
ICAEW expects PI cover to mirror its regulatory framework, which assumes annual renewals
Non-standard terms (like 18 months) may require formal dispensation
Failing to meet these conditions could mean your insurance isn't considered valid for regulatory purposes.
3. Cancellation and Regulatory Notification
What's expected:
If your PI policy is cancelled or lapses, you must promptly notify your regulator.
The risk with 18-month terms:
Longer terms may increase the chance of internal tracking failures, especially if your firm isn't accustomed to non-annual renewal cycles. Missing a deadline could lead to unintentional non-compliance.
4. Run-Off Cover and Consumer Protection
Why it matters:
If your firm ceases trading, regulators such as RICS require you to have run-off cover in place for up to six years to protect clients and third parties.
The challenge with 18-month policies:
If the policy wasn't structured to comply with standard terms, arranging a compliant run-off extension could be more complex or costly, especially if the original insurer isn't aligned with regulatory expectations.
5. Dispensation Isn't Always Easy
If your 18-month policy doesn't meet regulatory standards, you may be required to apply for dispensation (e.g. through the ICAEW PII Committee).
This process can be time-consuming
Approval is not guaranteed
Your firm could face restrictions or delays in the meantime
The LBH Insurance Approach
We specialise in Professional Indemnity insurance for architects and understand the exacting standards of bodies like RICS, ARB, and ICAEW.
When you work with LBH Insurance, you get:
- A policy that meets regulatory requirements
- Guidance on structuring your cover correctly
- Advice on run-off, aggregate limits, and compliance notifications
- Access to trusted, compliant insurers with a long track record in the sector
Speak to a PI Specialist
Before accepting a non-standard term like an 18-month PI policy, speak with one of our experienced brokers. We'll help you assess the risks, and if needed, provide a compliant, competitive quote tailored to your profession.
Call us on 01702 347889 for a no-obligation, competitive quote—and peace of mind that your cover reflects both your risk and your reputation or email enquiries@lbhinsurance.co.uk.
