Design & Construct Professional Indemnity Insurance

May 2009

Contractors or builders who provide design or other professional services in addition to or as part of their construction activities for clients assume the additional responsibilities and liabilities of a professional. Professional consulting firms that also engage in the sale of goods or contracting activities face similar exposures.

Whether or not you provide these professional services in-house or engage an external consultant you assume liability to your clients and other parties for claims arising out of damage, injury or loss incurred as a result of a breach of professional duty. Many public and private organisations are becoming increasingly aware of this professional liability exposure and are therefore including the requirement for professional indemnity insurance in design and construct tender documents.

Demand for this insurance is also being driven by an increased understanding that many public and products liability insurance policies exclude cover for claims (that would otherwise be covered) occurring as a result of the rendering or failure to render professional services.

Like all professional indemnity policies design and construct PI is a "claims made" class of insurance which means that you must report to your insurer during the relevant policy period all claims against you or circumstances that you become aware of that may give rise to a claim. The "claims made" nature of insurance also requires that you continue to purchase future policies as long as you wish to maintain protection.

Most "of the shelf" professional indemnity policies available in the Australian market contain outright "sale of goods" exclusions and therefore do not adequately cover design and construct exposures.

An appropriate design and construct professional indemnity policy may simply be a policy without an outright "sale of goods" exclusion however with the increased demand for such specialist products some insurers do offer tailored "design and construct" policy wordings. 

As specialist brokers our role is to best match our clients with the most appropriate policy taking into account their needs and objectives.

For further information please call one of our specialist consultants on 1800 077 933



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