What Is Professional Indemnity Insurance In Construction? – Carpentry and construction business Construction Professional Indemnity, also known as Design and Construct Professional Indemnity, is a type of insurance coverage meant to protect contractors and subcontractors from claims arising from faults in their work or faulty design.
Professional Indemnity Insurance in the Construction Industry Our in-house construction insurance expert at Romero Insurance Brokers discusses Professional Indemnity Insurance and how it affects both contractors and insurers. Professional indemnity insurance is a commercial policy designed to protect business owners, construction workers and the self-employed.

• It protects against allegations of professional negligence which most often draw from customers.
• Claims by customers can range from service being inadequate or materials being insufficient; specifically factors which cannot be controlled by the contractor.
• However, due to an increase in claims from the UK construction sector and catastrophes such as the Grenfell tragedy, the professional indemnity market has hardened.

A hardening of the market means insurers are quoting higher premiums, reducing indemnity limits and adding more restrictions/exclusions. All in all, this makes buying professional indemnity insurance more difficult and more expensive, ultimately leading to a temptation for other brokers and other construction businesses to overlook this policy type.

Why do I need professional indemnity insurance?

What is Professional Indemnity? – Professional Indemnity insurance is to cover your legal liability for the advice and design that you provide and also ensures protection against liability for breach of professional duty that you may face when providing a service. The definition of ‘design’ however has become much wider than ever before.

What is construction professional indemnity (PI) insurance?

What is the difference between Public Liability (PL) Insurance and Professional Indemnity (PI) Insurance? – Public Liability Insurance covers you against material damage to property and injury claims that result from negligence on behalf of you or one of your employees.

If a third-party experiences property damage or bodily injury as a result of your business activities, Public Liability Insurance will help cover the cost of the claim as well as court and legal fees. Professional Indemnity Insurance on the other hand has traditionally covered intangibles, such as financial loss due to faulty design, poor advice, or unintentional copyright infringement.

Professional Indemnity Insurance covers your legal defence fees and the cost of compensation you may owe due to damages. What can sometimes confuse matters is that Professional Indemnity Insurance can also provide cover for bodily injury and property damage, if this has occurred as a result of an incorrect design or professional service, for instance property damage occurring due to incorrect structural calculations being provided which results in a collapse.

Much like a Public Liability policy, Professional Indemnity Insurance it will not cover any claim arising from defective workmanship, including defective physical construction work, erection, installation, repair or service, defective products, or any defective materials, workmanship or production techniques used.

Both of the above types of insurance cover very different things, which is why it is important for contractors to hold both Professional Indemnity and Public Liability Insurance if they undertake any design work when carrying out construction projects, even if this design work is carried out by a third party such as an engineer.

Construction Professional Indemnity, also known as Design and Construct Professional Indemnity, is a policy designed to protect contractors and sub contracted specialists, for allegations relating to errors in their work or incorrect design. The policy covers the contractors legal defence costs and any damages awarded in relation to alleged errors in the design or the construction of a project, for instance the incorrect design, a project not being fit for purpose or a contractor not using the correct materials as detailed in the specification.

A standard Professional Indemnity policy will exclude any claims relating to an incorrect design, build, maintenance or installation, however a Design and Construct wording is specially designed to cover these types of claims. A Design and Construct Professional Indemnity policy will provide Rectification Cover – costs incurred in remediation work or mitigating a loss or potential loss that may otherwise result in a claim.

Most Contractors Professional Indemnity policies will generally include the following cover: Collateral Warranty Cover – claims arising from any collateral warranties, duty of care or similar agreements provided by you, to the extent that such liability would have attached to you in the absence of such contractual duty, term or agreement.

Consequential Losses – Cover for Indirect losses which accompanies an insured loss, for instance the loss of earning to a third party following a claim. Health & Safety Legislation Cove r – reasonable costs and expenses incurred with the insurers prior written consent for defence of any proceedings first brought against you under the Health & Safety Legislation Pollution Cover – claims arising out of the actual, alleged or threatened, sudden or accidental presence, discharge, dispersal, release, migration or escape of pollutants other than asbestos, nuclear or radioactive material of any sort.

Defence Costs Cover – covers defence costs incurred with the insurers prior written consent. Fraud and Dishonesty Cover – liability of your business to any third party resulting from fraudulent or dishonest conduct of any employee. Lost Documents Cover – costs of replacing or restoring documents lost in your custody or control.

Court Attendance Cover – if attending court as a witness by any principal, partner, member, director or employee when defending a claim, a typical rate of £250 -£500 per person per day. Indemnity insurance is slightly different to other types of insurance.

1. Whereas with a property or car insurance you are usually given a standard limit of cover (the maximum amount your insurer will pay out), with professional indemnity insurance, you will be given a range of limits to choose from.
2. So, which limit should you choose? This is one of the most common questions we are asked by our customers and there are a number of ways you can decide.

Check with your client – If you’re undertaking a contract for a specific client, they may well have specified a minimum amount of cover required for you to undertake the contract. If they have, you can simply choose this level of cover when buying your policy in order to meet their requirements.

1. Typically, we see most clients are requested to hold a minimum limit of indemnity of £1,000,000.
2. If they’ve specified that you need to have Professional Indemnity Insurance but don’t state a limit, it may be worth checking with them how much they would consider acceptable before you buy.
3. Check with your industry body – If you’re a member of an industry body they may require you to hold a minimum level of cover as a condition of membership.

Details about minimum cover requirements are usually contained in your membership agreement, but if you’re unsure, speak to your industry body directly to find out. Decide for yourself – If you simply want to arrange cover for all work you undertake, the best way to choose your limit of cover is to consider a worst-case scenario and how much you think it could cost to put right.

For each project you are working on, take into consideration: The cost of getting a third party to rectify a serious mistake you’ve made – depending on the type of work you do, this could be very costly in itself. For the construction industry rectification cover is a must, it covers the costs incurred in remediation work or mitigating a loss or potential loss that may otherwise result in a claim.

A typical example could be underpinning of foundations.

Any consequential losses your client would incur as a result of your mistake – for example, delay of a project leading losses or missed business opportunities Any damages or compensation due to your client which will usually decided by the courts unless a settlement is agreed Any legal fees incurred by your client in pursuing you – these can easily run into hundreds, if not thousands, of pounds

Our Professional Indemnity Insurance policies are tailored for the construction industry with cover limits ranging from £100,000 – £10,000,000 and higher. If you would like to discuss what type of limit might be appropriate for your business call 01732 252 898 to speak to one of our specialist advisors.

What is the difference between public liability insurance and professional indemnity insurance?

What is the difference between Public Liability (PL) Insurance and Professional Indemnity (PI) Insurance? – Public Liability Insurance covers you against material damage to property and injury claims that result from negligence on behalf of you or one of your employees.

If a third-party experiences property damage or bodily injury as a result of your business activities, Public Liability Insurance will help cover the cost of the claim as well as court and legal fees. Professional Indemnity Insurance on the other hand has traditionally covered intangibles, such as financial loss due to faulty design, poor advice, or unintentional copyright infringement.

Professional Indemnity Insurance covers your legal defence fees and the cost of compensation you may owe due to damages. What can sometimes confuse matters is that Professional Indemnity Insurance can also provide cover for bodily injury and property damage, if this has occurred as a result of an incorrect design or professional service, for instance property damage occurring due to incorrect structural calculations being provided which results in a collapse.

Much like a Public Liability policy, Professional Indemnity Insurance it will not cover any claim arising from defective workmanship, including defective physical construction work, erection, installation, repair or service, defective products, or any defective materials, workmanship or production techniques used.

Both of the above types of insurance cover very different things, which is why it is important for contractors to hold both Professional Indemnity and Public Liability Insurance if they undertake any design work when carrying out construction projects, even if this design work is carried out by a third party such as an engineer.

Construction Professional Indemnity, also known as Design and Construct Professional Indemnity, is a policy designed to protect contractors and sub contracted specialists, for allegations relating to errors in their work or incorrect design. The policy covers the contractors legal defence costs and any damages awarded in relation to alleged errors in the design or the construction of a project, for instance the incorrect design, a project not being fit for purpose or a contractor not using the correct materials as detailed in the specification.

A standard Professional Indemnity policy will exclude any claims relating to an incorrect design, build, maintenance or installation, however a Design and Construct wording is specially designed to cover these types of claims. A Design and Construct Professional Indemnity policy will provide Rectification Cover – costs incurred in remediation work or mitigating a loss or potential loss that may otherwise result in a claim.

Most Contractors Professional Indemnity policies will generally include the following cover: Collateral Warranty Cover – claims arising from any collateral warranties, duty of care or similar agreements provided by you, to the extent that such liability would have attached to you in the absence of such contractual duty, term or agreement.

Consequential Losses – Cover for Indirect losses which accompanies an insured loss, for instance the loss of earning to a third party following a claim. Health & Safety Legislation Cove r – reasonable costs and expenses incurred with the insurers prior written consent for defence of any proceedings first brought against you under the Health & Safety Legislation Pollution Cover – claims arising out of the actual, alleged or threatened, sudden or accidental presence, discharge, dispersal, release, migration or escape of pollutants other than asbestos, nuclear or radioactive material of any sort.

Defence Costs Cover – covers defence costs incurred with the insurers prior written consent. Fraud and Dishonesty Cover – liability of your business to any third party resulting from fraudulent or dishonest conduct of any employee. Lost Documents Cover – costs of replacing or restoring documents lost in your custody or control.

Court Attendance Cover – if attending court as a witness by any principal, partner, member, director or employee when defending a claim, a typical rate of £250 -£500 per person per day. Indemnity insurance is slightly different to other types of insurance.

1. Whereas with a property or car insurance you are usually given a standard limit of cover (the maximum amount your insurer will pay out), with professional indemnity insurance, you will be given a range of limits to choose from.
2. So, which limit should you choose? This is one of the most common questions we are asked by our customers and there are a number of ways you can decide.

Check with your client – If you’re undertaking a contract for a specific client, they may well have specified a minimum amount of cover required for you to undertake the contract. If they have, you can simply choose this level of cover when buying your policy in order to meet their requirements.

Typically, we see most clients are requested to hold a minimum limit of indemnity of £1,000,000. If they’ve specified that you need to have Professional Indemnity Insurance but don’t state a limit, it may be worth checking with them how much they would consider acceptable before you buy. Check with your industry body – If you’re a member of an industry body they may require you to hold a minimum level of cover as a condition of membership.

Details about minimum cover requirements are usually contained in your membership agreement, but if you’re unsure, speak to your industry body directly to find out. Decide for yourself – If you simply want to arrange cover for all work you undertake, the best way to choose your limit of cover is to consider a worst-case scenario and how much you think it could cost to put right.

• For each project you are working on, take into consideration: The cost of getting a third party to rectify a serious mistake you’ve made – depending on the type of work you do, this could be very costly in itself.
• For the construction industry rectification cover is a must, it covers the costs incurred in remediation work or mitigating a loss or potential loss that may otherwise result in a claim.

A typical example could be underpinning of foundations.

Any consequential losses your client would incur as a result of your mistake – for example, delay of a project leading losses or missed business opportunities Any damages or compensation due to your client which will usually decided by the courts unless a settlement is agreed Any legal fees incurred by your client in pursuing you – these can easily run into hundreds, if not thousands, of pounds

Our Professional Indemnity Insurance policies are tailored for the construction industry with cover limits ranging from £100,000 – £10,000,000 and higher. If you would like to discuss what type of limit might be appropriate for your business call 01732 252 898 to speak to one of our specialist advisors.

What is rectification cover in design and construct professional indemnity insurance?

What is the difference between Public Liability (PL) Insurance and Professional Indemnity (PI) Insurance? – Public Liability Insurance covers you against material damage to property and injury claims that result from negligence on behalf of you or one of your employees.

• If a third-party experiences property damage or bodily injury as a result of your business activities, Public Liability Insurance will help cover the cost of the claim as well as court and legal fees.
• Professional Indemnity Insurance on the other hand has traditionally covered intangibles, such as financial loss due to faulty design, poor advice, or unintentional copyright infringement.

Professional Indemnity Insurance covers your legal defence fees and the cost of compensation you may owe due to damages. What can sometimes confuse matters is that Professional Indemnity Insurance can also provide cover for bodily injury and property damage, if this has occurred as a result of an incorrect design or professional service, for instance property damage occurring due to incorrect structural calculations being provided which results in a collapse.

Much like a Public Liability policy, Professional Indemnity Insurance it will not cover any claim arising from defective workmanship, including defective physical construction work, erection, installation, repair or service, defective products, or any defective materials, workmanship or production techniques used.

Both of the above types of insurance cover very different things, which is why it is important for contractors to hold both Professional Indemnity and Public Liability Insurance if they undertake any design work when carrying out construction projects, even if this design work is carried out by a third party such as an engineer.

• Construction Professional Indemnity, also known as Design and Construct Professional Indemnity, is a policy designed to protect contractors and sub contracted specialists, for allegations relating to errors in their work or incorrect design.
• The policy covers the contractors legal defence costs and any damages awarded in relation to alleged errors in the design or the construction of a project, for instance the incorrect design, a project not being fit for purpose or a contractor not using the correct materials as detailed in the specification.

A standard Professional Indemnity policy will exclude any claims relating to an incorrect design, build, maintenance or installation, however a Design and Construct wording is specially designed to cover these types of claims. A Design and Construct Professional Indemnity policy will provide Rectification Cover – costs incurred in remediation work or mitigating a loss or potential loss that may otherwise result in a claim.

Most Contractors Professional Indemnity policies will generally include the following cover: Collateral Warranty Cover – claims arising from any collateral warranties, duty of care or similar agreements provided by you, to the extent that such liability would have attached to you in the absence of such contractual duty, term or agreement.

Consequential Losses – Cover for Indirect losses which accompanies an insured loss, for instance the loss of earning to a third party following a claim. Health & Safety Legislation Cove r – reasonable costs and expenses incurred with the insurers prior written consent for defence of any proceedings first brought against you under the Health & Safety Legislation Pollution Cover – claims arising out of the actual, alleged or threatened, sudden or accidental presence, discharge, dispersal, release, migration or escape of pollutants other than asbestos, nuclear or radioactive material of any sort.

1. Defence Costs Cover – covers defence costs incurred with the insurers prior written consent.
2. Fraud and Dishonesty Cover – liability of your business to any third party resulting from fraudulent or dishonest conduct of any employee.
3. Lost Documents Cover – costs of replacing or restoring documents lost in your custody or control.

Court Attendance Cover – if attending court as a witness by any principal, partner, member, director or employee when defending a claim, a typical rate of £250 -£500 per person per day. Indemnity insurance is slightly different to other types of insurance.

• Whereas with a property or car insurance you are usually given a standard limit of cover (the maximum amount your insurer will pay out), with professional indemnity insurance, you will be given a range of limits to choose from.
• So, which limit should you choose? This is one of the most common questions we are asked by our customers and there are a number of ways you can decide.

Check with your client – If you’re undertaking a contract for a specific client, they may well have specified a minimum amount of cover required for you to undertake the contract. If they have, you can simply choose this level of cover when buying your policy in order to meet their requirements.

1. Typically, we see most clients are requested to hold a minimum limit of indemnity of £1,000,000.
2. If they’ve specified that you need to have Professional Indemnity Insurance but don’t state a limit, it may be worth checking with them how much they would consider acceptable before you buy.
3. Check with your industry body – If you’re a member of an industry body they may require you to hold a minimum level of cover as a condition of membership.

Details about minimum cover requirements are usually contained in your membership agreement, but if you’re unsure, speak to your industry body directly to find out. Decide for yourself – If you simply want to arrange cover for all work you undertake, the best way to choose your limit of cover is to consider a worst-case scenario and how much you think it could cost to put right.

For each project you are working on, take into consideration: The cost of getting a third party to rectify a serious mistake you’ve made – depending on the type of work you do, this could be very costly in itself. For the construction industry rectification cover is a must, it covers the costs incurred in remediation work or mitigating a loss or potential loss that may otherwise result in a claim.

A typical example could be underpinning of foundations.

Any consequential losses your client would incur as a result of your mistake – for example, delay of a project leading losses or missed business opportunities Any damages or compensation due to your client which will usually decided by the courts unless a settlement is agreed Any legal fees incurred by your client in pursuing you – these can easily run into hundreds, if not thousands, of pounds

Our Professional Indemnity Insurance policies are tailored for the construction industry with cover limits ranging from £100,000 – £10,000,000 and higher. If you would like to discuss what type of limit might be appropriate for your business call 01732 252 898 to speak to one of our specialist advisors.