What an Architect should consider when taking out professional indemnity insurance

An Architects Guide to Professional Indemnity Insurance

For any architect in Ireland considering taking out professional indemnity insurance (PII), there are several important factors to consider to ensure you have adequate coverage and protection. These include coverage limits, as it is important to ensure your company have sufficient coverage limits to protect against potential liabilities. It is important to consider the scope of coverage, making sure it covers all the services you offer as an architect; design, consulting, project management, etc. Pay close attention to any exclusions listed in the policy. Seeking advice from independent insurance brokers or legal professionals, who specialise in professional indemnity insurance, can help you understand your coverage needs and find a policy that meets those requirements. It is important to ensure that your policy meets any regulatory requirements for architects in Ireland. Familiarise yourself with the Professional Indemnity Insurance requirements set by the Royal Institute of the Architects of Ireland (RIAI), or other relevant regulatory bodies. As architects, your role should be focused on design, creativity, preparing and executing a job, without the distraction or worry that you are not adequality covered to preform your role. So, how can Dolmen Insurance help you?

At Dolmen, we have a dedicated PII team, lead by Terry Dunne, with specialist knowledge of and relationships with insurers in the professional indemnity market for architects. We offer a range of services which help established and new firms obtain their cover quickly and at a competitive price. At Dolmen, we offer:

  • Any One Claim Basis
  • Cover for Fire Safety 
  • Civil Liability Cover
  • 'A' Rated Insurers 
  • Dedicated PI insurance team
  • Policies tailored to the requirements of your firm
  • Free collateral warranty and contract review  

Getting a quote for Professional Indemnity Insurance

Professional indemnity is a complex form of insurance. When arranging this cover, most firms will require some tailoring of their policy to ensure it provides exactly the right needs and protection for their firm. This may be a small tweak to the policy, such as increased Pollution Cover, or something more substantial, like higher level of Fire Safety Cover....basically things to help you win contracts whilst still protecting your firm!

When buying this type of commercial insurance, specialist advice from a broker is normally obtained. A good broker lowers the premium cost, as well as providing valuable advice and support, especially on warranties/contracts and claims.

Examples of claims against Architects

Professional negligence claims against architects are surprisingly common in Ireland.  Claims and legal costs can be extremely high, even when the architect is not at fault. Here are some examples of professional indemnity insurance claims many architects have faced:

Case 1: Architects were engaged to design and supervise the construction of a new office block in Dublin. Once construction was completed, dampness began to appear at the property. The builder and the architect were both joined in the action for substantial damages by the property owner. Outcome - The architect’s professional indemnity insurer defended the action. Specialist solicitors were appointed by the insurer and a successful defence was provided. The legal defence costs were €300,000 and covered by the professional indemnity policy, even though the architect had no wrongdoing.

Case 2: Architects signed a certificate of practical completion on a residential new build in Cork. Various snagging issues arose that went unresolved by the contractors, who then blamed design faults as the cause of the problems. Outcome - The insurers paid €450,000 in settlement and costs.

Case 3: Various problems with the construction of a new one-off house build in south Dublin caused construction delays and additional costs for the project. This led to a claim against the architect who was involved in the building's planning, design and site inspection. Outcome - Amount paid  €65,000.

How is your premium calculated?

The rating of an Architect firm is not a simple process. Premiums are calculated based on many factors which will include:

  • The claims history 
  • Categories of work undertaken 
  • Size and Type of Contracts
  • Past works carried out
  • The number of partners / directors to staff ratios   
  • Firm’s fee income

To assess the risk, the underwriter will usually require a fully completed proposal form which they will consider in detail. They will also look at the firm’s website, or they may even look deeper online into a firm’s or partner’s background. 

Does a good impression really matter?

Presentation of your firm is more important than you might think. You are essentially asking an underwriter to back your firm and they will be assessing the professionalism and quality of your firm.  If the information is badly presented, it may influence their judgement and the premium they offer, or they may even decline to quote. This is where a specialist Broker like Dolmen can be key to getting the best terms available, by reviewing your submission with you and not simply forwarding a poorly completed / incomplete submission to potential insurers.