PROFESSIONAL INDEMNITY INSURANCE UPDATE
Insurance is a mandatory requirement of registration as an architect. However, changes to contracts and insurance policies can lead to projects or aspects of practice becoming excluded from your insurance policy.
Two issues that members should be aware of are:
- DPTI contracts for STEM projects which require the LPSC to warrant their work
- Exclusion of insurance for projects with cladding or non-compliant products
Further detail regarding these issues and potential actions that you should consider are provided below.
Thanks to those members who have brought these issues to the attention of the SA Chapter and the SA Practice Committee for preparing this information for issue to members.
STEM Project Insurance risks
With regards to engaging and entering in contracts for the STEM projects, the Institute suggests you should have a discussion with your PI Insurance broker, as there are some potential risks that may require adjustment to your current insurance policy wording
For example, The DPTI contract for novation requires that the LPSC “warrants” its own work. Advice received from Planned Cover indicated a preference to adopt the word “confirm”.
Response from DPTI
DPTI advises it is unable to agree to the proposed amendment to replace “warrant” with “confirm” in the Deed of Novation. DPTI considers it is reasonable that the LPSC warrants its own work. Further we note the Deed of Novation is included in your Contract and is based on the Australian Standard form which is widely accepted by industry. DPTI suggests you ensure your insurer covers you for warranting your work.
We strongly suggest you ask your Insurance Broker to review any contract that DPTI ask you to sign in order to identify any clauses that your PI cover may not provide adequate cover for and to then ask the broker if there is any additional cover available to you that might address or minimise the additional exposure you may be incurring. It is our understanding that for a relatively small additional premium there are additional endorsements that you can effect which you may find of benefit in addressing the additional liabilities you may be exposed to.
If you broker is not able to provide you this type of service we strongly suggest you seek one that does or at the very least ensure that you obtain appropriate legal advice so that you fully understand the additional liabilities you may be taking on board by signing up to these types of agreements.
Exclusions for Cladding / Non-compliant Products
Some insurers have introduced exclusions for projects that involve the use of cladding or non-compliant products in response to the risks that have surfaced following incidents such as the Lacrosse Building and Grenfell Building fires. We are aware that cladding and non-compliant products are very broad terms and may not be well defined in the policy document. We also understand that these exclusions may be applied retrospectively in some policies.
It is important you check your insurance policy carefully at the time of renewal and raise any changes that you are concerned about or which you do not fully understand with your broker prior to renewing. If your broker cannot address these concerns to your satisfaction or does not exhibit sufficient understanding about the issue you should seek alternative advice from suitably qualified persons.