Design and Construct PI Insurance Claims

By Cliff

Even though Professional Indemnity (PI) insurance policy availability is falling, the number of innovative new builds is increasing. As the speed of technological development accelerates, so does the degree of exposure faced by building designers and engineers.

Most new business comes with a PI insurance requirement in the modern construction industry. This includes partnering contractors who have no direct involvement in building design, whereas in previous years Public Liability insurance may have sufficed.

Manchester Underwriting Management, an underwriting agency, provided these clear examples of how it works:

A PI insured contractor was working on a hotel design and build project. Design errors became apparent during construction, causing extra costs and delays. Meanwhile the subcontracted architect had ceased trading and so the corresponding PI insurance failed to respond, which left the contractor liable. The claim paid was £850,000.

In contrast, there was a fire in a shopping centre for which the fire insurer claimed against 13 parties. These included the building contractor: the insurer alleged that the faulty design of an extractor flue allowed hot gases to build up. While the claim was successfully defended, irrecoverable costs amounted to £80,000.

An insured HVAC specialist designed and installed a heating and ventilation system for a restaurant. After completion, the air extraction and temperature control didn’t work properly so the restaurant had to close for repairs. The claim paid was £150,000 plus costs.

The need for experienced insurance brokers like Home Counties Insurance to help minimise price increases through well-informed broking and risk management has never been greater. Call us on 01525 719955 or email for help.


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