Professional indemnity insurance should be an important consideration for any architect starting up. Ensuring you have sufficiently budgeted for the cost and have adequate protection available is paramount.
From creating plans, specifying the types of materials used, to overseeing the build to completion, there’s a lot of responsibility at stake. With an architect expected to carry the burden of responsibility – it’s worth remembering that mistakes will invariably happen.
It’s not uncommon for architects can be found responsible for offering bad advice on failed projects, to liability for contributory negligence after a building sustains damage. Architects PI insurance ensures there is financial protection available for liability claims in the course of their professional activities.
Architects PI insurance is a key consideration for any firm or individual to operate successfully. Alleviating the financial burden of any errors, if they unfortunately occur.
Professional indemnity insurance for architects
PI insurance protects architects from negligence, omissions and genuine errors/miscalculations. In recent years, even the most skilled professionals have found themselves the subject of legal action after carrying out work.
Errors in planning, poor design, the recommended use of unsuitable materials or a failure to abide by relevant planning regulations (or a failure to obtain the correct planning permission) can all lead to litigation. Failure to stick to a specified budget could also lead to a civil action, as a client attempts to recoup any additional costs they have incurred.
Architect’s professional Indemnity is arranged on what is known as a ‘claims made basis’ rather than the traditional ‘claims occurring’. This means the insurer will pay claims at the time an allegation is made, rather than when the act, error or omission occurred.
PI insurance premiums will vary depending on the nature of your activities and the size and types of projects you undertake. To ensure your firm is covered against potential litigation, speak with your insurance broker.
The legal arguments used against architects
Many compensation claims made against architects creates new precedents. This means the UK courts have never had to deal with a case of its type before. When mounting a legal challenge, solicitors will generally focus on three primary elements:
- The duty of care owed by an architect
- How this duty of care was breached
- How this breach caused the client to encounter a financial loss
In some cases, the breaches are plainly obvious. However, precedent setting cases can become drawn out and complex, leading to large legal fees. Which means it’s important to have the right architects insurance in place to fully cover the costs, whether you’re an individual architect or operating as a large firm.
How much professional indemnity do architects require?
UK registered architecture firms with the Architects Registration Board are required to hold a minimum professional indemnity limit £250,000 each and every claim. However, each firm has to decide whether they have sufficient architects insurance for the work they undertake.
The ARB also recommends that architects have a minimum six years of run-off cover if the business closes. Speak with your insurance broker to ensure you purchase the correct architects insurance to meet your requirements.
Other architects insurance that should be considered
There is a wide range of potential insurance cover available to protect architect’s from liability and property damage. The most commonly purchased is employers’ liability and public liability.
Cyber insurance, business interruption and management liability are also commonly purchased to ensure the firms to provide comprehensive cover for their architects insurance.
In addition to purchasing the correct insurance, your firm may benefit from taking a closer look at your risk management policies and procedures. A codified risk management policy will explain your organisation’s risk appetite, process for managing risk, responsibilities and any related materials, to assist mitigate your firm’s exposure to third party claimants.