Professional Indemnity Insurance for Building Contractors
We had a call recently from a building contractor regarding Professional indemnity (P.I.) Insurance cover. The reason for the enquiry was primarily due to the fact the contractor was also providing a small degree of surveying and architectural services which typically warrants professional indemnity insurance cover, covering against defective design.
The client was unsure of the level of cover they required. After a comprehensive discussion we were able to advise the client of the appropriate level of professional indemnity insurance cover they needed given the size of the business, the size of the projects undertaken, and the nature and scope of the various services they provided.
The client was unsure of how to go about obtaining a professional indemnity insurance quote for Design and Construct;but through our guidance and explanations, the client was able to successfully provide the necessary information. We relayed this toseveralof our specialist Professional indemnity insurance providers for design and construct and were able to negotiate terms for the client, ultimately resulting in a competitive quotation to suit their business.
Protecting your Building Company
In a similar vein to this particular case, it is important that any business is educated to the principle of being held liable for their provision of advice, or even a service. This is due to the fact that companies and businessmen alike are automaticallyregarded to be held as professionals in their field – and can be held responsible for any financial loss which may occur following their services or advice provided to others.
There have been a number of past lawsuits where unintended negligence, which is certainly not limited to the construction trade, has resulted in a client suffering a large economic / financial loss. A construction-related example is when a contractor refurbished private flats in accordance to their own design;whereby particular parts of the units they used were installed in an erroneous way leading to water penetration and approximately £230,000 of damages.
Therefore, it is so paramount to take out a professional indemnity (PI) insurance policy, to protect against eventualities such as this.
Design and Construct is the commonly used term for Contractors Professional Indemnity and will cover the main contractor for:
- Any defect in design further down the line.
- Situations where a client claims a builder carried out an inadequate service or gave negligent advice.
Below are 2 commonly asked questions:
“I get an architect to do the designs so it’s not my responsibility”
Not quite…. A construction client may think that because they are not explicitly providing the designs themselves they are off the hook if there is a mistake. Think again! If they appoint the architect directly then they are the first point of call for a claim.
“I buy public liability – that’ll do!”
The short answer is it won’t! Only having employers or public liability insurance in place means your client’s cover is limited.
Yes they may be covered if they cause damage to the public, but not if they were asked to design a wall and it turned out to be faulty or if they adapted a plan they were working on. Only professional indemnity will cover this type of problem!
For the best advice on Design and Construct Professional Indemnity Insurance speak to an advisor at Construction Insure who will make sure you fully understand what you are buying and why you are buying it.