Renewing professional indemnity insurance (PII) cover has become increasingly challenging for architects over the past few years. Many have experienced the cost of premiums rising significantly, while exclusions may have affected the nature of the work practices are insured to carry out.
RIBA has published an updated Professional Indemnity Insurance Practice Note. This sets out the context of the current situation, recognising that the vast majority of RIBA Chartered Practices currently face some form of restriction or complete exclusion of cover in relation to fire safety.
Within this context, the Practice Note aims to provide best practice guidance. The following summarises some of the Practice Note's key points, but RIBA members are urged to read the Practice Note in full.
Communicating with your insurance broker
The Practice Note maintains its advice to make early contact with your insurance broker prior to renewal and to submit your renewal proposal in good time, acknowledging that it is currently taking on average up to three times longer to secure renewal terms.
The common thread underlying its many recommendations is that of good communication. Explain the background of your practice, the nature of your work and your client base, and point out any good risk management procedures you have in place.
Practices with accurate record keeping, it advises, good knowledge of the materials they specify, robust quality management systems and a proper risk management process will be more attractive to PI insurers.
"Giving insurers as full and accurate a picture as possible cannot be wrong and can prevent any knee jerk response from the insurer," suggests Mark Klimt, one of RIBA’s Specialist Practice Consultants.
"It is also an opportunity to highlight the checks and balances you have in your systems to guard against problems, which will give insurers a proper idea of what they are getting into."
Your contractors' PI insurance policy
The Practice Note recommends that you check the PI insurance policy of your contractors. Does it have limitations and exclusion clauses resulting in narrower cover than your own? Are the contractual requirements for your PI insurance are more onerous than those offered by the contractor’s policy?
Considerations when changing insurers
Attention is drawn in the Practice Note to the Construction Industry Council's risk management briefing on changing insurers, which urges caution when changing insurers, as cheaper policies may not provide the same level of cover. There is also a risk that claims will not be covered in the future, or will be disputed and may not be paid.
Your broker, it recommends, should be able to advise on any differences in the scope of cover afforded when changing insurer, as well as ensuring that all appropriate notifications have been made to your previous insurer.
Inability to obtain PI insurance cover
The Practice Note provides several recommendations for those practices that are unable to obtain PI insurance (including run off cover); and those significantly affected by limitations or exclusions attached to your policy (including cladding or fire safety).
First and foremost, it recommends seeking legal advice regarding the contractual obligations of your project work. Free 15 minute consultations from the RIBA’s specialist practice consultants are available to RIBA Chartered Members, through the members' information line: +44 (0)20 7307 3600. This is open Monday to Friday, from 10am to 1pm and 2pm to 5pm.
You should keep a record of your efforts to secure wider insurance and ask your insurance broker to provide a statement attesting to the market-wide restrictions that insurers are imposing. You should also check whether any agreements with past and current clients include a contractual obligation to inform them of these changes to your PI insurance cover.
Mark Klimt will be giving a presentation on How to practice with exclusions to your PI insurance at the RIBA conference Guerrilla Tactics 2021: Stop, Collaborate and Listen.
Thanks to Mark Klimt, Partner, DWF.
Text by Neal Morris. This is a Professional Feature edited by the RIBA Practice team. Send us your feedback and ideas.
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