All architects need to have professional indemnity insurance, as specified in the Architect’s Code.
Even the most skilled and careful architect can make mistakes. And if something does happen, then the architect can be found liable.
Mistakes and negligence can cost a client a significant amount of money, whether this is on a new build or a refurbishment. This, in turn, can cost the architect a substantial amount if they are found to be at fault.
According to NimbleFins, architect professional indemnity insurance is also important to cover claims where there has been no wrongdoing because there is still a financial cost to defending a frivolous claim. And those legal expenses can easily reach into the thousands.
Standard 8 says: “All architects are expected to have adequate and appropriate insurance. This applies to both the architect, practice and any employees. This insurance coverage also needs to be adequate to meet a claim, and there is a minimum level of insurance cover required in accordance with the Architects Registration Board.”
If you are carrying out any type of architectural work outside of your main job or practice, you are still required to have insurance cover.
As much as possible, employed architects should ensure there is the necessary professional indemnity cover in place. However, it is your responsibility to ensure you are covered.
Architects must be able to provide evidence of their professional indemnity insurance when requested.
What is an architect’s professional indemnity insurance?
Professional indemnity insurance (PI) is a type of insurance cover that can provide protection for those giving professional advice and services.
It is one of the most important types of insurance for professions such as architects, who are paid for their professional expertise.
PI will cover both legal defence costs incurred in both defending a claim and appealing, as well as compensation if you are found liable.
Architect’s PI insurance is a vital cover in the profession. So much so that the minimum level recommended is a coverage limit of £250,000 for each claim.
Claims against architects that PI can cover include errors in drawings, delays caused by failing to get planning permission, decisions made without consulting with the client, poor advice, personal injury and using different materials than what was agreed.
An important note with professional indemnity insurance is that you need to be insured at the time of an alleged incident as well as the time of a claim being made. This is because the cover is normally sold on a claim’s made basis. The cover is only in place while there is an active insurance policy. If the policy is expired or cancelled, it will no longer provide cover for claims made after that date. And errors or alleged errors might not be discovered until a long time after a project, even years after completion.
There is a limit to when claims can be made. For example, suing an architect for negligence has to be done within six years of the event or within three years of that negligence being noticed.
Do architects need public liability insurance?
Claims against architects are not limited to the standard of advice or mistakes made that can cost a client money, but also against personal injury. Therefore there is also a need for public liability insurance.
It is the same for architects as it is for any profession working with public members, including clients, as this can lead to claims of injury or property damage. This could be anything from slipping on the floor in an office to a serious incident on a construction site.
And it is claims like this that would be covered by public liability insurance.
Personal injury or property damage claims can be costly too, easily reaching tens of thousands of pounds from the costs of legal fees and settlement pay-outs.
Although public liability insurance isn’t a legal requirement for architects, it can be considered critical when considering the catastrophic costs that a claim could result in.
Public liability insurance can offer cover for legal costs, compensation, medical bills and repairs to the property.
What other insurance types does an architect need?
Like any other business, architects need to consider all the potential risks they face and look at how to best protect themselves from these risks – for instance, with appropriate types of insurance cover. However, when it comes to insurances, the other types of cover depend on the business itself.
For architects running a practice with employees such as other architects, administrative staff or assistants, it is a legal requirement to have employer’s liability insurance (EL).
EL is compulsory for all businesses with employees. It provides cover for any legal costs or compensation payments coming from an employee becoming ill or injured at work and suing the company.
There is also business equipment insurance, personal accident insurance, and commercial vehicle insurance, which can be of crucial benefit to architects.
For any architect practices with company cars, commercial vehicle insurance is necessary to cover the costs of incidents involving company-owned vehicles.