Professional Indemnity Insurance is a legal requirement for all architects and covers the cost of defending a claim, plus any compensation payments that may be awarded against you arising from negligent acts, errors or omissions. Most policies also include cover for: breach of duty or care, breach of copyright, libel and slander and loss of documents.
Insurers take the following factors into consideration when looking to provide a PI quotation:
- Date business established
- Experience and qualifications
- Type and size of projects that you are involved in
- Claims experience
- Geographical area where work is carried out
- Type of technology used
The last decade has seen the construction sector go through a particularly difficult time on PI which saw premiums increase significantly, cover being restricted and very little or no appetite from insurers, but more recently market conditions have started to improve, and we are now seeing competition from insurers return bringing lower premiums and cover improvements.
Fire Safety cover is now available, however the breadth of this varies dramatically dependant on the provider and careful attention need to be paid to subtle differences in the wording, such as definitions of Fire Safety and what Retroactive Date is being applied.
Changes to the Building Safety Act 2022 has brought increased regulatory scrutiny, compliance obligations and longer limitation periods, exposing firms to new risks.
In addition to PI Insurance, Architects should also consider:
Cyber Insurance
Because of the sensitive and valuable data being held, Architects are highly attractive to Cyber Criminals. Ransomware attacks are one of the most common types of loss seen by insurers and the impact can be devasting to a business. PI policies now exclude Cyber and Data loss as standard, so its vitally important that firms purchase a robust Cyber Liability Insurance policy.
A Cyber Liability policy can provide cover for the following:
- Breach notification costs and crisis management expenses
- Legal costs and third-party compensation payment costs in the event of a data breach
- Data recovery and system repairs
- Business Interruption – loss of income because of a data breach
- Theft of money from Cyber Crime
- Insurable penalties and fines
Directors’ and Officers’ Insurance (D&O)/Management Liability Insurance
Directors’ and Senior Executives in the UK are subject to legislation, such as The Companies Act 2006 which contains more than 200 offences. Your personal assets can be at risk should a claim be brought for alleged wrongful actions and decisions taken while running the business.
Examples could be regulatory investigations, corporate insolvency, breach or mismanagement of data, corporate manslaughter and employment related issues, such as harassment or discrimination.
Changes to the Building Safety Act 2022 have brought increased regulatory scrutiny and responsibility to Directors and Managers. The BSA will extend liability for Directors and Managers that breach Building Regulations or the new Building Control Regime, therefore firms should ensure they have a good quality Directors and Officers (D&O) policy in place.
Directors’ and Officers’ (D&O) Insurance reimburses directors’ and senior managers for legal defence costs, compensation payments and investigation costs and can also reimburse the entity should they pay a claim on behalf of the individual.
New risks affecting the PII construction market:
Artificial Intelligence (AI)
Architects are increasingly taking advantage of AI technology to create detailed designs; whilst this undoubtedly brings many benefits, this also creates new risks. There is a misconception that AI is ‘failsafe’, however unfortunately this is not the case. Hallucinations, Code Errors and Perpetuated Bias are just some of the issues which can lead to errors, misinformation and leaked data.
RAAC
The issues surrounding Reinforced Autoclaved Aerated Concrete, and the subsequent government review of schools and remediation work is an area insurers have been keeping a close watch on and which could develop. The remediation of RAAC could expose unknown asbestos which is excluded on some PI policies. Firms may find additional questions being asked on this subject at renewal and insurers may look to impose cover restrictions or exclusions relating to this.
ESG
Environmental, Social and Governance, is a hot topic for insurers. Regulation, legislation and reporting requirements are evolving at a rapid pace in many jurisdictions across the World and will undoubtedly lead to increased accountability for Directors and Officers and further extend the duty of care held by professionals in the construction industry.
Future-Proof your business
The team at QPI consist of Risk Management, Legal and Insurance specialists who have a wealth of experience in arranging insurance programmes for the construction sector.
Advice that Counts
It’s not a problem until it is……
The true value of your PI insurance is unfortunately usually only seen when there’s a claim. Our team consists of Risk Management, Legal and Insurance experts, which means, should there be a problem, you’re in very safe hands. We pride ourselves on going the extra mile, in fact, we thrive when given the opportunity to help with anything complex or difficult!
Proactive Approach
There’s no complacency here! We understand how important cost is and are passionate about getting the best deal for our clients. This starts from really understanding what your business does and making sure we keep up to date with any changes, ensuring that your business is not exposed to any gaps in cover. We then use our knowledge of the market and relationships to secure the best cover at the best price.
For a free, no obligation review of your current insurance arrangements, contact hayley.dawson@qualitypi.co.uk, or call 07955 270487. Alternatively send us a quick message below and we will be in touch!