Professional indemnity insurance for a mortgage or insurance broker: the FCA minimum cover, the cap on the excess, and the income at which the cap starts to rise

At renewal a broker is sent a quote with a number for the excess, the amount the firm pays on each claim before the insurer pays anything. Two questions follow: is the cover big enough, and is the excess one the FCA allows? This guide answers both from the Handbook text, for a firm arranging mortgages or insurance.

What this is, and is not. A reading of MIPRU 3.2 on the FCA Handbook site on 6 October 2026. We did not confirm the limits that apply to a firm giving investment advice, which sit in other parts of the Handbook, so this guide is not about those. We also did not confirm how "annual income" is defined for the percentage tests, or the current sterling value of a euro limit. Check both with your insurer or broker.

What the rules say

MIPRU 3.2.1 requires a firm to take out and maintain professional indemnity insurance at least equal to the requirements of that section, from an authorised insurer. MIPRU 3.2.2 says that a firm whose permission covers both insurance distribution and home finance mediation must meet the higher of the two sets of limits.

For a firm acting as a mortgage adviser or arranger under the Mortgage Credit Directive, MIPRU 3.2.9B sets the minimum at EUR 460,000 for each claim and EUR 750,000 in aggregate per calendar year for all claims. MIPRU 3.2.8 says that if a policy is written in another currency, the firm must take reasonable steps to make sure the limits are at least equivalent to those required, when the policy starts and at renewal.

The excess is capped, not set:

• MIPRU 3.2.11, a firm that does not hold client money: the excess must not exceed the higher of £2,500 and 1.5% of annual income.
• MIPRU 3.2.12, a firm that holds client money or assets: the excess must not exceed the higher of £5,000 and 3% of annual income.

A lower excess is always allowed. The cap only bites if a quote is above it.

Our working

The flat sum and the percentage meet where income x 1.5% = £2,500, which is £2,500 / 0.015 = £166,667 (rounded). For the client money limit, £5,000 / 0.03 is also £166,667. Below that income the flat sum is the cap; above it the percentage is.

• £250,000 x 0.015 = £3,750.
• £400,000 x 0.015 = £6,000, and £400,000 x 0.03 = £12,000.

So a firm on £250,000 of income that is quoted a £5,000 excess, and holds no client money, is over the limit by £1,250. We have not read what happens to a policy that breaches the cap, so ask the insurer to confirm in writing that the quote meets MIPRU 3.2.11.

A renewal check

1. Write down the firm's annual income, the figure your insurer uses.
2. Say whether the firm holds client money or assets.
3. Work out the cap from the table above and compare it with the quoted excess.
4. Check the per-claim and aggregate limits against MIPRU 3.2.9B, or the insurance limits if you arrange insurance.
5. File the quote and the working with the other firm records. Our guide to how long client files must be kept covers keeping them.

Insurance is also a yearly cost beside the regulator's. See what a mortgage broker pays the FCA in 2026/27 and the FCA fees and FSCS levy guide. Claims often start as complaints, so see which complaint deadline applies.

Overlyft can set up an AI assistant that gathers the income figure, the client money position and the quoted excess at each renewal, runs the cap sum above and flags any quote over the limit for the owner to check with the insurer.

This is general information, not legal advice.