A Professional Indemnity policy, also known as an Errors & Omissions Insurance policy covers professionals who are directly providing services to clients. The policy’s focus is to protect the insured party from any type of loss emanating from their professional services.
An architect’s professional indemnity insurance deals with protecting the architect and his firm against allegations of an error or inadequate and negligent professional architectural services.
Role of Architects
An architect is a specialist who develops conceptual ideas for structures using their proficient drawing abilities and construction expertise and implements those plans while adhering to all safety regulations. The structures include all type of construction projects, renovations, and redevelopment. Architects are essential to the design of projects because they collaborate closely with surveyors, building service engineers, and other professionals to create secure, long-lasting structures.
Why Do Architects Need Professional Indemnity Insurance
People make mistakes, and workplace errors are still complex. Regardless of the project type, even with 3D visualisation, architects face new challenges with unavoidable problems along the way. There are numerous ways for things to go wrong, and some of the most common are improper communication, lack of organisation and management, lack of skill, lack of attention, failure to perform building materials related checks, negligence, poor service, incorrect design, incorrect drawing of plans, cost overrun, and delay.
The architects’ errors and wrongful acts result in losses for the clients, which may result in court cases. These cases are expensive to defend and may take years to complete, so architects will need professional indemnity insurance to protect themselves from these claims. The premiums of these claims are determined by the occupation, the number of employees, the fees generated, the sums insured, and the claims experience.
Professional Indemnity Insurance for Architects Coverage
As per the policy, with the financial/material/physical injury caused by the insured’s wrongful act, this insurance agrees to pay for the defense costs, settlement expenses, and losses imposed by law. The claims include:
- Breach of confidentiality
- IPR Infringement
- Claims preparation
- Civil liability and contractual liabilities
- Breach of contract
- Breach of privacy
- Defamation and Libel
If the major considerations include the firm’s turnover, total employees, prior claims experience, and the limit of indemnity required, the architects’ professional indemnity policy is advantageous. Professional indemnity insurance with add-on coverage is preferred by small business insurance brokers and architects. Some of the add on coverage includes:
- Dishonesty of employees
- Copyright infringement
- Restoration of lost documents
- Advancement of emergency costs
- Pay for mitigation measures for errors committed
- Unintentional infringement of Intellectual property rights
- Retroactive date cover for projects
It is always important to consider the exclusions in the insurance before purchasing the indemnity policy. Following are the exclusions in the architect’s professional indemnity policy:
- Claims on account of the wilful misconduct of the insured
- Claims on the account of deceitful intention of the insured
- Providing false information (Might lead to cancellation of the policy)
- Any bodily injury or property damage that your business is responsible for
- The claim that the insured was aware of the occurrence, before the inception of the policy
- Harassment or discrimination claims filed by your employees
- Claim made against you because of your Bankruptcy
Losses that occurred prior to the retroactive date are ineligible for coverage under this insurance contract policy.
Selecting the Right Level of Professional Indemnity Insurance Policy
The selection process is very vital as there is “no one size fits all” and depends totally on your business needs. The nature of your project, the size of the contracts, the risks involved, risk preferences, and your budget are all the main factors to consider while purchasing an architect’s professional indemnity policy.
Insurance brokers are always of immense help for this process, as insurance products will have varying levels of coverage and their characteristic features. Brokers greatly help architects in,
- Analyzing the competitive quotes on policy initiation
- Finding suitable insurance companies
- Negotiate with the insurance company to limit the rise in renewals
- Consulting with the underwriters for appropriate policy wordings and terms
Purchasing a suitable architect’s professional indemnity policy to protect your business is a wise decision that will always benefit you. Policy will protect you from unwanted claims, mistakes you didn’t make, and unintentional errors. When a client sues you and your company is unable to pay, the insurance protects your assets by paying for the compensatory costs imposed by the court.
Many architects are still unsure whether they are properly insured. In such cases, small business insurance brokers can assist you in selecting the appropriate architect’s indemnity policy and enable you to run your business with confidence.