Architects May Need Broker Guidance If New PI Policy Terms Are Imposed
The impacts of a hardening insurance market, along with a waning insurer appetite for the provision of professional indemnity insurance to the construction sector, are creating a situation that is forcing many architects’ practices to close their doors.
Whilst some insurers have stopped offering any form of professional indemnity insurance to professions associated with the construction industry, others are increasing premiums by what has been 500 per cent, in some cases.[1]
Those offered cover are typically finding that it has worrying exclusions, particularly with regard to fire safety, as the industry continues to reel from the Grenfell Tower tragedy, even though three years have already passed. Insurance policy excesses are also tending to be considerably higher than was the case at the inception of the original cover, requiring the insured to commit to pick up a greater proportion of the cost of any future claim themselves.
Many architects are being presented with little choice but to agree to terms, at the time of renewal, and have limited options to shop around to find a better deal. It can be a ‘this or nothing’ scenario when it comes to policy renewal and it is this that is often the catalyst for architects’ practice closures, or a restriction of the services that a practice can offer to its clients.
One thing architects and others impacted by this situation need to consider very hard, is the retrospective cover that a professional indemnity policy should provide. This should protect against claims arising from past work, which can have been carried out as long as 12 years before the period of cover. Any insured party needs to check that new exclusions on cover do not leave them exposed, should any historic projects generate a claim, which would originally have been covered by the insurance policy, but which may no longer be included within newly imposed and restricted terms.
Policy wordings can be a minefield at the best of times but knowing what changing policy terms mean may be something with which non-insurance professionals struggle greatly. Any architect wishing to know where they stand with their cover, having had their terms changed, should consult a broker who can interpret the new wording and explain the ramifications. Anyone less experienced in buying without this personal approach and in-depth analysis of the policy wording is unlikely to gain such insight. Some may not even know that their cover has been altered or may not have understood how great an impact any new restrictions could have.
If you are an architect, or a consultant to the construction trade who is also finding it difficult to find affordable cover, or are confused about what new policy terms that have been put to you mean, it is advisable to get some solid advice from a broker who understands the sector. If you need help with finding someone to assist you, please get in touch.