Professional Indemnity for Design and Construction

Introduction

In recent years it has become common place for contractors to incur a design liability, either by offering a design service as part of an overall building package or through a design and build contract where the design work is sub-contracted.

Quotation

Complete our quick quote form and email it to us.

Alternatively, send us your renewal proposal form and we'll quickly check our panel of insurers to obtain the best combination of premium and cover that we can.

You can also call us on 01270 252 252 to speak to one of our advisors. Don't forget, if you need any other insurance cover for yourself or your business, we can help with that too.

Usual cover

Cover will normally include the following:

• Design or specification
• Feasibility study
• Technical information calculation
• Surveying - undertaken only by, or under the direction and direct control of, a properly qualified Architect, Engineer or Surveyor.

Usual extensions

• Loss of documents
• Libel and slander
• Collateral warranties
• Adjudication in accordance with the Housing Grants, Construction & Regeneration Act 1996
• Duty to warn - a Contractor that has no design or professional supervisory responsibility may still have a duty to warn the client if they become aware of a design defect

Usual exclusions

Typically, policies will exclude:

• Death or bodily injury
• Loss or damage to physical property
• Punitive or exemplary damages (many policies have no geographical or jurisdiction limitations)
• North American offices and jurisdiction
• Liability to other Insureds
• Nuclear risks
• Claims and circumstances known at inception of the cover
• Onerous collateral warranties
• Pollution

What do insurers look for?

There is of course no professional body for contractors. It is for this reason that insurers have to pay careful attention to the qualifications and experience of the principals and staff. If a contractor is offering professional services then insurers will expect to see qualified staff, frequently a qualified Architect, Engineer or Surveyor. If there are no qualified staff, then insurers will want to see CV's for those involved in technical work, normally demonstrating at least five years' practical experience, maybe more depending on the services offered.

Insurers will also be interested in the following information:

• Contract sizes
• Technology in use within your firm
• Overseas work - do you carry out work for overseas clients?
• Retroactive cover - do you need cover for past work?
• Turnover and fee income

Claims examples

• Design failure - contractors provided client with a design and build service in respect of construction of a quarry conveyor belt capable of carrying tonnes of material. Design of system sub-contracted out to specialists. After catastrophic failure of conveyor belt machinery, substantial damage was caused. Although the claim was subrogated by PI insurers against specialist designers, the claim was settled against Contractor for £42,000.
• Alleged specification failure - major fire at Heathrow Terminal 1 emanating from fast food restaurant caused multi-million pound damage. Insured, one of 13 defendants added as co-defendants by building insurers. One of many allegations involved the inadequate specification of extractor flue that allowed hot gasses to build. Although the contractor was involved in specification, the claim was successfully defended. Costs £50,000.
• Design failure - temperature of new cold storage room at factory consistently too high because of inadequate design. Paid £250,000 plus costs.
• Inadequate design - air extraction and temperature control at restaurant failed to work properly. Restaurant was closed pending repairs. Paid £150,000 plus costs.
• Structural design defect - incorrect structural calculations contributed to total building failure of new car park. Paid £750,000 plus costs.
• Negligent project management - contractor instructed in role of project managers on existing but uncompleted development, problem due to bankruptcy of original contractors. Project involved restarting development, i.e. putting it back on track, utilising previous designs but new professional team. Allegations of negligence concerning duplication of work carried out by original team and additional duplications between new team, Surveyors, Engineers and QS. This led to an over-run on the contract budget. Settled £26,500.

Associated links

Chartered Institute of Building
These corporate members have earned the right to call themselves Chartered Builders, a title which puts them on par with other construction professionals like architects, engineers and surveyors.

British Computer Society
The BCS is the only Chartered Engineering Institution for Information Systems Engineering.

Institution of Electrical Engineers
Founded in 1871, IEE is the largest professional engineering society in Europe and has a worldwide membership of just under 140,000.

British Property Federation (BPF)
The BPF is the trade association of the property industry, representing owners and investors in commercial and residential property. The property assets held by BPF members are over £100bn.

The Association of Consulting Engineers (ACE)
ACE is the UK's leading trade association for engineering, technical and management consultancies.

Further information

For a quote or further information please email us or contact us and we will be happy to help. You can also register your renewal date and we’ll contact you when your insurance is due for renewal.