Architects pi insurance
Architects are regarded as a 'traditional' profession. The profession as a whole is regulated by the Architects Registration Board (ARB). Architects PI insurance became mandatory for all qualified Architects in 1997.
Whilst the ARB is the governing body for the profession, the Royal Institute of British Architects (RIBA) is perhaps the best known organisation representing the industry. All Architects must be registered with the ARB and it is the ARB which lays down the rules for Architects PI (see www.arb.org.uk).
Architects need to be a member of RIBA in order to obtain Chartered Status. Architects are involved in all aspects of planning, designing and supervising the construction of buildings of all types.
When applying for Architects PI insurance what Key elements do insurer’s look for when underwriting a risk?.
- Practice Size – Established from the number of partners and staff and the gross annual income of the firm.
- Qualification and experience – Underwriters will want to satisfy themselves that an architect is suitably qualified and/or experienced to carry out the work undertaken on behalf of his client before providing Architects PI Insurance cover..
- Type of work - Underwriters will be particularly interested in what type of work the architect is involved in and the split of annual income derived from each of these areas.
- Contract sizes – The larger the contracts the more complex the job is likely to be leading to increased exposure.
- Overseas exposure - Does the practice carry out work for overseas client? Underwriters are particularly interested in knowing if there is work for USA or Canadian Clients.
- Retroactive exposure - Does the practice have an exposure to claims arising from past work, whether in the current firm or a former practice?
- Claims experience – This will help to determine the quality of the practice's work, staff, internal risk management and experience.
- Asbestos exposure - Often policies exclude or severely restrict the cover for this work. If the practice is involved in the assessment or supervision of handling hazardous materials like asbestos then Insurers are able to provide cover but this will normally be on a restrictive basis
As mentioned earlier the ARB lays down the rules for Architects PI. Wordings are required to be written on a 'civil liability' basis (covering all civil liability, not just negligence).
The usual cover
Usually the limit of indemnity will be "any one claim" with legal costs in addition. The excess will not normally apply to insurers' costs and expenses. If the cover is on a civil liability basis, then the cover would normally include negligence, liability for dishonesty, liability for lost documents, libel and slander and breach of warranty of authority.
Limits of Indemnity
The ARB makes it a requirement that Architects carry a minimum limit of indemnity depending on their Fee income in the past financial year as follows:
£250,000 where fees are less than £100,000 in the past financial year.
£500,000 where fees are greater than £100,000 but less than £200,000.
£1,000,000 for all practices with fees of greater than £200,000
If the practice ceases, partners must ensure that they purchase run-off cover for at least six years. The limit of indemnity must be maintained at the highest level in the preceding three years to the cessation of the practice.
A 'Professional' is generally regarded as any person who offers 'specialist' advice or service.
You owe legal duty of care to your clients.
Legal costs in defending claims can be very high.