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Risk, Liability and Insurance, 1st edition

Risk, Liability and Insurance, 1st edition

This guidance note is intended to assist both members and their clients in understanding the main risks and liabilities associated with surveying. It guides members in the negotiation of equitable contracts with clients and the avoidance of major risks and pitfalls.

This guidance note was amended on 30th November 2021 to include paragraph 2.4.5 covering the subject of indemnities requested by a client, which had been omitted from the original version in error.

Risk, Liability and Insurance: Top tips

  • Liability caps - RICS recommends regulated firms use liability caps, where legally permissible and following the principles of good practice set out in the guidance note, as a way to manage the risk of their professional work, and to ensure that there is a fair allocation of risk and reward between members and their clients.
  • Third party reliance - Regulated firms need to be aware of third-party reliance and make clear in their contracts/engagement terms that their advice may only be relied upon by the named client, so as to ensure that they are aware of and have control over future requests for third party reliance.
  • Terms and conditions - There are at least three key terms that should be considered from a risk perspective in the context of every instruction that a surveyor undertakes:
    • The scope of the work
    • The basis on which the fee will be calculated
    • The liability cap
  • Professional Indemnity Insurance (PII) – PII is a key part of managing risk and in arranging PII, regulated firms should ensure that the amount of cover purchased is consistent with the nature of their practice, proportionate to the risks taken by the firm and consistent with the RICS PII requirements.
  • PII – Although larger firms sometimes have designated partners or employees who manage the firm’s insurance arrangements, it is important that all partners and senior members are involved to an appropriate extent and have at least a working knowledge of the firm’s professional indemnity insurance

It is recommended that RICS regulated firms take a fresh look at their risk management strategies and the way in which they conclude contracts and revisit their standards terms and conditions.