Insurance Flashcards
What are the insurances involved in the Construction Industry?
- CONSULTANTS = Professional Indemnity Insurance
- CONTRACTOR = All Risks Insurance
- CONTRACTOR = Public Liability Insurance
- CLIENT = Employers Liability Insurance
How would a net contributions clause affect this?
“Net contribution clauses seek to ensure that the consultant’s liability is only for the loss they cause
“
If another party is also responsible for loss the client will have to sue them separately
Where two or more parties involved in a construction project are each jointly liable for the same loss or damage, the liability of each party will be limited to the amount which would be apportioned to that party by a court
What are fire safety exclusions in PI Insurance
· Following Grenfell, the vast majority of cases professional indemnity insurers are applying full cladding and fire safety exclusion.
· From 1 May 2021 any exclusion will NOT APPLY to professional work relating to buildings 4 storeys or under.
What is the latest guidance from the RICS on PI Insurance
· Professional Indemnity Insurance Requirements April 2022
· Risk, liability and insurance – April 2021
How long should you maintain PI Insurance for
Dependant on how the contract has been executed, PI should be held for:
· Signed on underhand - 6 years
· Signed under seal - 12 years
· RICS recommend 15 years to cover latent defects
Why do the RICS recommend 15-years
· The ‘longstop’ time limit for professional negligence claims is essentially an ultimate cut-off point.
· The ‘longstop’ is set at 15 years from the date the negligence occurred. If you discover that an surveyor breached their contract 15 years ago or longer, then you are no longer able to bring a claim against them.
What does the RICS say about PI Insurance
· All RICS-regulated firms need to ensure they have adequate and appropriate professional indemnity insurance in place that complies with the requirements of the RICS Rules of Conduct and the RICS Professional Indemnity Insurance requirements
What are the minimum standards RICS requires that a firms PII Policy should meet
· RICS’ minimum policy wording or more comprehensive wording. Written on a full civil liability basis. Policy wording - full civil liability
· Cover for ‘each and every’ claim basis or in the aggregate plus unlimited round the clock reinstatement Each and every - aggregate clock
· Minimum level of indemnity based on the firm’s turnover in the previous year (or estimated for a new firm). Minimum level of indemnity
· Maximum level of uninsured excess Maximum uninsured excess
· Be fully retroactive [on a “claims made” basis]. Policy covers against claims made at any time i.e. claims made due to advice / services provided before the cover was taken out will still be claimed under the existing policy. Fully retroactive
· Run-off cover - minimum of 6 years Run off minimum 6 years
Underwritten by an RICS listed insurer Underwritten
Should include cover for past and present employees, directors and partners Past and present
What is meant by “in the aggregate plus unlimited round the clock reinstatements”
Thelimit of indemnityis still in the aggregate but once the full limit has been eroded, the limit of indemnity will be reinstated without limit to the number of reinstatements during the policy period. This basis is used for more complex programmes where there are multiple layers.Unlimited round the clock reinstatementsoperate similarly to any one claim with the key difference being from insurers perspective in terms of how and when excess layers are triggered.
What is Fully retroactive insurance?
” Be fully retroactive. PII policies work on a ‘claims made’ basis. This means that the policy
covers claims that are first made against the insured during the period of insurance
regardless of when the negligent act occurred. If the retroactive date of the policy is stated
as ‘none’ then the policy is fully retroactive and all former work carried out by the firm will be
covered.”
What are the minimum limited of indemnity
TURNOVER 100k or less = £250k limit
100k to 200k = £500k limit
200k and above = £1m
What is the maximum level of uninsured excess
TURNOVER £10m or less = the greater of 2.5% of the sum insured, or £10,000 for uninsured excess
Over £10m = no limit set
