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Design & Construct Insurance

Professional Indemnity Insurance designed specifically to protect you from financial loss in the building industry.
Design & Construct Insurance

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For Engineers
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Design & Construct Insurance – Tailored insurance and advice

What is Professional Indemnity Insurance?

Professional Indemnity Insurance is intended to protect you should you become legally liable for costs as a result of;

  • An actual negligent act, error, or omission, or
  • Any alleged negligence act, error, or omission

Professional Indemnity Insurance is no longer just for the traditional professionals such as Accountants, Architects, Lawyers, and Engineers. Now, many other types of businesses, including builders, have Professional Indemnity exposures that they should consider protecting.

A large number of contracts for construction now require Design and Construct entities to maintain their own Professional Indemnity Insurance. More importantly, customers are becoming increasingly aware of their rights to pursue construction companies, where they believe those entities are responsible for a loss they have suffered in relation to poor or inadequate design.

Why choose us for your Design & Construct Professional Indemnity Insurance?

Fast Cover

Multiple Quotes

Tailored Advice

Design & Construction Insurance Experts

Facts from a construction insurer

45% of buildings that fail are due to design issues, so design risk is always present.

Builders who engage consultants are exposed to any liability that results from that consultant’s work or advice.

This exposure can be partial, for example, for simple defence costs, or total there the consultant may have ceased trading.

Design & Construct vs standard Professional Indemnity policies

Standard Professional Indemnity policies are not generally suitable for any business that performs physical construction work, as most Professional Indemnity policies will contain standard exclusions for claims in connection with construction, installation or fabrication of any goods or products.

‘Design & Construct’ Professional Indemnity policies have been specifically designed to cater for businesses that perform the physical construction or manufacture of products, goods, structures or buildings, as well as having responsibility for the provision of any design, advice or any other professional services relating to those works.

Cover under a Design & Construct Professional Indemnity policy provides protection from financial loss, for the conduct of professionals in the building industry who perform a combination of physical construction or
installation and design. Examples of coverage may include;

  • Civil Liability for the provision of your Professional Services
  • Claims as a result of Faulty Designs or Inaccurate Advice
  • Breach of Duty (including acts, errors, omissions, misleading statements)
  • Mitigation Costs
  • Defence Costs

Do I still need Public Liability or Contract Works cover?

Yes. A Design & Construct policy will provide Professional Indemnity cover only, and is not intended to replace the cover that a Public Liability or Contract Works policy would provide.

Claims examples

Example 2 – A builder with Design & Construct Professional Indemnity Insurance

The roof of a newly constructed warehouse collapsed during a storm. The builder had a Design & Construct contract for the warehouse, but had subcontracted the design for the roof to a Structural Engineer, and had built to that design.

The owner claimed damages of $10 million against the builder, who took a subrogated claim against the Structural Engineer. The builder’s Professional Indemnity insurer successfully defended the builder and paid $250,000 in defence costs under the policy.

Further to this, if the Structural Engineer had ceased trading, the builder would have been liable for the full $10 million in damages, potentially without recourse. In that case, the builder’s Professional Indemnity policy would have indemnified them.

Example 3 – A builder with NO Design & Construct Professional Indemnity Insurance

A customer engaged an architect to help with the design of their new home. The architect specified that a polyurethane coating should be put over a natural stone tile floor to protect the stone and enhance its appearance. Sometime after the builder completed the job, hairline cracks developed across the whole floor.

The architect claimed that the cracks were caused due to defective workmanship. Even though the builder refuted this, the owner began legal action against him for around $1 million.

The builder was insured by a Contract Works Insurance policy and claimed against it. Evidence revealed that the polyurethane coating on the tiles caused the cracking, and the cause was therefore a design issue.

The builder’s Contract Works policy excluded the defective floor, because the material damage section of the policy had expired on that contract. The liability section didn’t cover design faults, or remediation of products.

As a result, the builder had to fund his own defence costs of $70,000. However, if the builder had taken out Professional Indemnity cover, it would have paid his defence costs.

The builder’s only hope of recovering these costs now is to sue and recover from the architect.

Example 1 – A builder with Design & Construct Professional Indemnity Insurance

A builder was contracted to provide a natural grey concrete floor in a residential dwelling. When the floor was inspected, the builders’ customer advised the finish did not meet their expectations and believed the finish would have a negative effect on the current and resale value of the house.

The customer sought compensation from the builder for their perceived financial loss. Builder did agree with their customer and the floor finish did not comply with their expectations.

The difficulty, in this case, was that the floors weren’t revealed until most of the house was completed (and couldn’t be replaced). This claim was covered under the builders Design & Construct Professional Indemnity policy.

This claim provides a great example of the difference between a construction professional’s (engineers/architects/project manager) Professional Indemnity insurance policy and a Design & Construct Professional Indemnity insurance policy. This type of claim would not be covered under a standard Professional Indemnity insurance policy, which generally excludes claims relating to the sale, manufacture, installation, construction, alteration, repair, servicing or treating of any goods.

The claim would also not be covered under a Public and Products liability policy, as there has been no bodily injury or property damage.

Example 2 – A builder with Design & Construct Professional Indemnity Insurance

The roof of a newly constructed warehouse collapsed during a storm. The builder had a Design & Construct contract for the warehouse, but had subcontracted the design for the roof to a Structural Engineer, and had built to that design.

The owner claimed damages of $10 million against the builder, who took a subrogated claim against the Structural Engineer. The builder’s Professional Indemnity insurer successfully defended the builder and paid $250,000 in defence costs under the policy.

Further to this, if the Structural Engineer had ceased trading, the builder would have been liable for the full $10 million in damages, potentially without recourse. In that case, the builder’s Professional Indemnity policy would have indemnified them.

Example 3 – A builder with NO Design & Construct Professional Indemnity Insurance

A customer engaged an architect to help with the design of their new home. The architect specified that a polyurethane coating should be put over a natural stone tile floor to protect the stone and enhance its appearance. Sometime after the builder completed the job, hairline cracks developed across the whole floor.

The architect claimed that the cracks were caused due to defective workmanship. Even though the builder refuted this, the owner began legal action against him for around $1 million.

The builder was insured by a Contract Works Insurance policy and claimed against it. Evidence revealed that the polyurethane coating on the tiles caused the cracking, and the cause was therefore a design issue.

The builder’s Contract Works policy excluded the defective floor, because the material damage section of the policy had expired on that contract. The liability section didn’t cover design faults, or remediation of products.

As a result, the builder had to fund his own defence costs of $70,000. However, if the builder had taken out Professional Indemnity cover, it would have paid his defence costs.

The builder’s only hope of recovering these costs now is to sue and recover from the architect.

Example 1 – A builder with Design & Construct Professional Indemnity Insurance

A builder was contracted to provide a natural grey concrete floor in a residential dwelling. When the floor was inspected, the builders’ customer advised the finish did not meet their expectations and believed the finish would have a negative effect on the current and resale value of the house.

The customer sought compensation from the builder for their perceived financial loss. Builder did agree with their customer and the floor finish did not comply with their expectations.

The difficulty, in this case, was that the floors weren’t revealed until most of the house was completed (and couldn’t be replaced). This claim was covered under the builders Design & Construct Professional Indemnity policy.

This claim provides a great example of the difference between a construction professional’s (engineers/architects/project manager) Professional Indemnity insurance policy and a Design & Construct Professional Indemnity insurance policy. This type of claim would not be covered under a standard Professional Indemnity insurance policy, which generally excludes claims relating to the sale, manufacture, installation, construction, alteration, repair, servicing or treating of any goods.

The claim would also not be covered under a Public and Products liability policy, as there has been no bodily injury or property damage.

Example 2 – A builder with Design & Construct Professional Indemnity Insurance

The roof of a newly constructed warehouse collapsed during a storm. The builder had a Design & Construct contract for the warehouse, but had subcontracted the design for the roof to a Structural Engineer, and had built to that design.

The owner claimed damages of $10 million against the builder, who took a subrogated claim against the Structural Engineer. The builder’s Professional Indemnity insurer successfully defended the builder and paid $250,000 in defence costs under the policy.

Further to this, if the Structural Engineer had ceased trading, the builder would have been liable for the full $10 million in damages, potentially without recourse. In that case, the builder’s Professional Indemnity policy would have indemnified them.

Get a Design & Construct Insurance Quote

To arrange an obligation-free quote, please select your occupation below and complete our online form. If you would like more information or have any questions, please call us on 1300 932 237.

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