Architects’ Professional Indemnity Insurance: What’s Covered and What’s Not Explained
As an architect, you have the power to create masterpieces that are safe, functional, and aesthetically pleasing. However, despite your best efforts, there are always chances of something going wrong. Any small mistake can lead to problems or massive losses, leaving you liable for all such damages or financial losses.
That’s where Architects’ Professional Indemnity Insurance comes in. It protects you against such claims made by the clients on your design or construction.
In this blog, we’ll dive into Architects’ Professional Indemnity insurance. So read further to know what is covered and what is not under this policy.
What is Architects’ Professional Indemnity Insurance?
Architects’ Professional Indemnity Insurance is a type of insurance that provides coverage for claims made against architects for professional negligence. It includes error, omission, or a failure to exercise the reasonable skill and care expected of a competent architect, resulting in damage or financial loss to a client.
This type of insurance is essential for both individual architects and firms, as it provides financial help for legal defence and damages for the claim by the client. For instance, practising architects work as sub-contractors for other architects or offer services through licensed corporations, making it essential for them to take Professional Indemnity Insurance.
Why do Architects require Professional Indemnity Insurance?
When you become a professional, you are legally considered an expert in a particular field. It means you must meet a higher standard of numerous qualifications than the general public in their chosen field.
So if a client or landowner suffers losses due to your failure to perform the professional duty, the client can sue you for such physical, material and financial loss. And sometimes, settling these claims can take many years, adding to the heavy legal bill whether you win or lose.
Therefore, Professional Indemnity insurance can help you when defending a claim. So you won’t bear such damages out of pocket.
What is covered under Architects Professional Indemnity Insurance?
Architects’ Professional Indemnity Insurance covers legal charges and liabilities arising from professional negligence. Some of the common reasons for claims include:
- Designing Error or Omission: As an architect, you must ensure that no errors or omissions happen during the planning or designing of the property. Otherwise, it can lead to problems in construction or financial loss of a client, leading to claims against you.
- Failure to meet building regulations or planning permission requirements: If your work fails to meet the required building regulations or planning permission requirements, it could lead to problems during and after the construction of the building. So your client or the third party may claim for their financial loss.
- Breach of contract: Claims made against you for breaching the contract. For example, a client can bear a financial burden if you fail to complete the project on time or within budget.
- Lack of communication: If you lack in delivering services or proper advice to the client, it can cause a big problem in the project.
Moreover, Architects’ Professional Indemnity Insurance offers you financial protection for the cost incurred in:
- Investigation of claims by regulators or professional authorities
- Restoring or repairing the documents
- Defending a criminal proceeding
- Hiring Public Relations consultants to restore your reputation
However, to settle the case before it results in a claim against you or the organisation, PI helps you through mitigation charges.
What Architects’ Professional Indemnity Insurance doesn’t cover?
While Architects’ Professional Indemnity Insurance provides valuable protection for architects, it may not cover certain situations like:
- Property Damage/Bodily Injury: The policy will not protect against property damage or bodily injury unless it arises from the performance of professional services.
- Intentional or deliberate acts: If an architect knowingly commences activities, causing damage to the building or property.
- Terrorism Claims: If someone claims against you for damages arising from an act of terrorism, your professional indemnity policy will likely not cover it.
Some other losses happening due to war, electrical or telecommunication failure, infringement of intellectual copyrights, fines or penalties, and more are not included in professional indemnity insurance. However, every policy has different exclusions, making it crucial to understand what is not covered by your policy. So you can take appropriate steps to mitigate such risks.
What are the factors to consider when selecting an Architect’s professional Indemnity Insurance policy?
When selecting an Architects’ Professional Indemnity Insurance policy, there are several factors to consider in addition to what is covered and what is not. These include:
- Coverage limits: Always assess the coverage amount provided under the policy, helping you select the one with enough coverage if someone claims against you.
- Cost of the policy: Before you opt for insurance, access your budget concerning the insurance. So you will know which premium you can afford to pay.
- Insurance broker: Always look for the experience of an insurer offering professional indemnity insurance concerning your field. Usually, certain insurance brokers specialise in specific areas, helping you curate the best coverage.
Conclusion
As an architect, you play a crucial role in designing and constructing complex projects. Any mistake on your part holds the capability to cause serious issues, putting a hefty financial burden on you.
Thankfully, Architects’ Professional Indemnity Insurance protects you as an architect from professional negligence during a claim. We hope all the points discussed above will help you to select the best coverage, helping you mitigate risk.
