Professional Indemnity Insurance in the Construction Industry (eBook)

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Published Date

May 2013

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Professional Indemnity Insurance in the Construction Industry (eBook)

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This publication will be of interest to insurance professionals engaged in the day to day business of construction insurance, underwriting, claims negotiation and risk management. It will also be useful to lawyers, construction professionals and contractors.

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This publication details the application of basic insurance principles, such as utmost good faith and subrogation. It examines how liability arises, making reference to the Bolam Test and contractual influences. Policy wording is explained in depth, ensuring readers are informed on the use of both clauses and specific, individual words. The publication is supported by reference to over 100 case studies.

Chapter 1        The Application of Basic Insurance Principles and the Relationship with                              Other Insurance Products

                        1.1       Introduction

                  1.2       Application of Basic Principles

                  1.3       Relationship with Other Insurances

                  1.4       Latent Defects Insurance

Chapter 2        How Liability Arises, the Bolam Test, Reasonable Skill and Care, Fitness for                        Purpose, Duties of Designers, Influence of Standard Building Agreements

                  2.1       How Liability Arises

                  2.2       The Statutory Limitation Issue

                  2.3       Statutory Influences

                  2.4       Reasonable Skill and Care – The Bolam Test

                  2.5       The Fitness of Purpose Debate

                  2.6       Other Factors Affecting Liability

                  2.7       Extent of Designer’s Duties

                  2.8       Influence of Standard Building Contracts

Chapter 3        Nature of the Policy Wording, Retroactive Dates, Policy Extensions,                                    Exclusions and Conditions, Policy Schedule
                        3.1       Introduction

                  3.2       Legal Costs

                  3.3       Retroactive Dates

                  3.4       Policy Extensions

                  3.5       Change of Partners

                  3.6       Run-off Liability

                  3.7       Other Extensions

                  3.8       Policy Exclusions

                  3.9       Policy Conditions

                  3.10     Conditions of Concern to Construction Risks

                        3.11     Policy Schedule
Chapter 4        Cover for Construction Professionals, Architects, Engineers, Surveyors and                        Project Managers, Underwriting Criteria

                  4.1       Architects

                  4.2       Points to Consider

                  4.3       Underwriting Criteria

                  4.4       Legal Aspects

                  4.5       Surveyors

                  4.6       Consulting Engineers

                  4.7       Project Managers

                  4.8       Specific Cover Issues

Chapter 5        Design and Build Insurance

                  5.1       Introduction

                  5.2       Legal Aspects

                  5.3       Completion Date

                  5.4       Obligation to Insure

                  5.5       Dispute Resolution

                  5.6       Novation

                  5.7       Matters Affecting the Policy Cover

                  5.8       Subcontracting

                  5.9       Design and Build Policy Wording

                  5.10     Underwriting the Design and Build Risk

                  5.11     Underwriting Criteria

Chapter 6        Rights of Third Parties, Collateral Warranties, Economic Loss and the                                 Complex Structures Theory

                  6.1       Introduction

                  6.2       Collateral Warranties – Legal Background

                  6.3       Definition of a Collateral Warranty

                  6.4       Complex Structures Theory

                  6.5       Contents of Collateral Warranties

                  6.6       Other Issues Surrounding Collateral Warranties

                  6.7       Contracts (Rights of Third Parties) Act 1999

                  6.8       Third Parties (Rights Against Insurers) Act 2010

Chapter 7        Claims

                  7.1       Introduction
                  7.2       Notification of Professional Indemnity Claims

                  7.3       Adjudication

                  7.4       Claims Handling

                  7.5       Time Limits

          7.6       Other Limitation Factors

                  7.7       Insurance Coverage Issues

                  7.8       Examples of Claims Against Professionals

                  7.9       VAT in Construction Claims

                  7.10     Global Settlements

Chapter 8        Risk Management for Professionals

                  8.1       Introduction

                  8.2       Reputation is No Defence

                  8.3       Professional Risk Management

                  8.4       Checklists for Architects and Engineers

                  8.5       Collateral Warranties

                  8.6       Safety Aspects

                  8.7       Environmental Liability Issues

                  8.8       Risk Financing

                  8.9       Disaster Recovery Plans

                  8.10     Tips for Notifying Claims

As an insurance broker and risk consultant with 30 years’ experience in handling construction accounts, I have encountered several publications on the subject of professional indemnity insurance. However, none of these relate solely to the risks associated with the construction industry.

Apart from the conventional cover for architects, engineers and surveyors, today’s market is driven by the development of the design and build method of procurement, which today accounts for an estimated 70% of all work carried out under standard building agreements.

The book will be of interest not only to insurance practitioners, but also to lawyers, construction professionals and contractors. I hope that it will be of use to the many employees engaged in the day to day business of construction insurance, underwriting, claims negotiation and risk management.


Witherbys titles are developed using scripts developed by technical experts that are peer reviewed within work groups. Typically, they seek to improve understanding of the regulations, recommendations and guidelines issued by Industry.

Witherbys staff have significant expertise in the fields of navigation and hazardous cargoes as well as in the presentation of complex subjects in a graphic and easy to understand manner.

John D. Wright

John D. Wright FCII is Principal Marine Surveyor at Lloyd’s Register of Shipping. His time serving in the role of Quality Manager has informed his writing on the subject of indemnity insurance.

Title: Professional Indemnity Insurance in the Construction Industry (eBook)
Number of Pages: 164
Product Code: WS1393EA
ISBN: ISBN 13: 978-1-85609-588-4 (9781856095884), ISBN 10: 1-85609-588-6 (1856095886)
Published Date: May 2013

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