How much Professional Indemnity Insurance - Architect - Residential project

[invest2019]

I wonder does anyone know

How much (£) Professional Indemnity Insurance one would expect a RIBA Architect to have in place for a simple single storey residential extension (to cover all phases from initial design through completion of project including acting as project manager/administrator?

Am working with a talented RIBA Architect who is just in process of setting up his own practice now. Very surprised at suggestion £30,000 was adequate to cover a £70,000 project. This seems far to low to me.

Any ideas most welcome. Thank you.

[pochisoldi]

http://www.arb.org.uk/architect-informa ... -guidance/

Limit of Indemnity

The Board recommends that the minimum limit of indemnity provided by PII should be £250,000 for each and every claim. Any departure from this minimum is likely to result in only minor savings in premiums, and should not be considered without receiving professional advice that cover level remains appropriate.

If you architect has insufficient cover, I would ask myself the question "How can I trust you to look after my interests, if you can't even look after your own?"

[invest2019]

Exactly the information I was seeking.

Point certainly taken as per your question.

Many thanks

[Dod101]

I would imagine his professional body will have a minimum requirement, far above the £30,000 you mention. That is derisory and ought to be ignored. I see that pochisoldi has found the answer to my point, of £250,000 which I think is still much too low. The architect will not or should not anyway, be taking out insurance per contract, but he should have an annual cover for all claims arising in the period from any contract. I would look for a Limit of Indemnity of not less than £1,000,000 per claim, unlimited in the period or if not unlimited, it should be at least £5,000,000. You are not just thinking of the value of the building but of consequential losses as well (maybe caused by a delay or whatever). I was in the insurance business a long time ago and one of the things that I always stressed is that everyone insures there house but actually the bigger risk is third party liability, because in most cases the liability is unlimited whereas with a house, the risk is limited to the rebuilding cost. You still have the land.

Dod

[invest2019]

Thank you Dod.

Yes I take your point and at £250K per ARB minimum it still seems low.

I'm very grateful for the information which leads me to re consider my next steps.

I may come back with further questions re insurance for project once I have clarified my thoughts.

One issue is whether I have a RIBA Architect or not, what insurance do I needs as the home owner (no mortgage) extending this property.

I have yet to speak to my own insurance provider.

I am wondering what question I should be asking of my own insurance provider?

And what cover I should be looking for?

And I suspect I need specialist insurer for this or not?

Any further thoughts very welcome, particularly thinking around the "project management" responsiblibites as well, if not with RiBA properly insured architect?

Thank you.

[supremetwo]

I would imagine his professional body will have a minimum requirement, far above the £30,000 you mention. That is derisory and ought to be ignored. I see that pochisoldi has found the answer to my point, of £250,000 which I think is still much too low. The architect will not or should not anyway, be taking out insurance per contract, but he should have an annual cover for all claims arising in the period from any contract. I would look for a Limit of Indemnity of not less than £1,000,000 per claim, unlimited in the period or if not unlimited, it should be at least £5,000,000. You are not just thinking of the value of the building but of consequential losses as well (maybe caused by a delay or whatever). I was in the insurance business a long time ago and one of the things that I always stressed is that everyone insures there house but actually the bigger risk is third party liability, because in most cases the liability is unlimited whereas with a house, the risk is limited to the rebuilding cost. You still have the land. Dod

Found an example of insurance prices for architects.

https://www.insurance2day.co.uk/profess ... rchitects/
£1,417.50 for up to £100k turnover and a £2,000,000 cover.

I thought our premium was expensive (£5 million cover) but, if the above are typical, it appears that insurers consider that architects are at the high end of the risk scale.

[Dod101]

Well essentially the contractor ought to have insurance to cover the contract works against theft, fire, collapse and so on but it may be that he will ask you to arrange it via your own insurers because you will of course need to advise them since it increases the risk to your existing property. That though is a matter of the contract details. From your point of view that is very important, more so than the architect's professional indemnity cover, which hopefully you will never need (or rather the architect will never need) to claim on.

Dod

[sg31]

Don't forget to inform your home insurers that you are going to have building work carried out. Surprisingly few people do so and it is a big mistake because it might lead to them refusing claims. Generally the insurer will apply slightly more restricted cover and the premium will increase by about 50% but still better than effectively being uninsured.

Terms will vary depending on the insurer, specialist companies will quote for the cover but generally staying with your current insurer is generally cheaper.

[PinkDalek]

Don't forget to inform your home insurers that you are going to have building work carried out. ...

Terms will vary depending on the insurer, specialist companies will quote for the cover but generally staying with your current insurer is generally cheaper.

Our policy includes:

You must notify your broker: ...

at least 30 days before you start any work to extend, renovate, build or demolish any part of the buildings, or any work involving the use of heat, where the contract value is more than £50,000;

A brief search using that key phrase gives results mentioning £50,000/£75,000/£100,000 so, as you indicate, it would depend on each policy. One included no monetary limit whatsoever.

[invest2019]

Thank you to all, for the very helpful responses.

Making good progress and really appreciate the support.

It's late here, so to review this coming week.

Onwards and will probably be back.... what it has clarified is that I need to ensure that all parties are confident there is adequate insurance in place.

That way I can sleep and so can any architect contractor and or sub contractor.

Onwards.

[csearle]

This inspired me to check mine. £2m liability / £100k professional indemnity. Mind you that's for an electrician not an architect so not the same set of risks. C.

[invest2019]

1. I spoke to ARB this morning on PIII. They go no further than saying £250K as minimum which doesn't satisfy my needs as Dod points out.

2. I spoke to my own buiildings/contents insurer, AXA, about proposed project. I set out basics of initial enquiry re a possible single storey extension. I was told ok to go ahead providing appropriate contractors insurance in place, that I did not need to advise my insurance co. of start or end date of build. When questioned further they said any claim would be on contractors insurance. If a dispute my legal expenses cover of £50K "might" cover dispute but £50K doesn't go far.

So the parts of the puzzle seem
a) architect to provide evidence of cover at level of ? at least GBP 2,000,000
b) contractor cover to what level
c) intention is building works covered by JCT contract
d) architect acts as project manager/administrator hence liability sits with architect

What is my risk exposure then?

It seems a third party claim, risk of bankruptcy, mistakes, negligence, delay, theft fire etc???

Does anyone know what insurance do other home owners take out when extending a property?

And or does any one know who would answer the questions as to level of cover the architect to provide (inc as project administrator), and for the main contractor, and for the structural engineer and mechanical engineer etc... and so it goes on. Someone I suspect has written a piece on Insurance for Home Extensions.

Any ideas appreciated, apologies this has gone a bit beyond PPI for Architects,

Thank you

[invest2019]

"Any ideas appreciated, apologies this has gone a bit beyond PPI for Architects"


Correction: ".... has gone a bit beyond PII (not PPI) for Architects"

[supremetwo]

.
And or does any one know who would answer the questions as to level of cover the architect to provide (inc as project administrator), and for the main contractor, and for the structural engineer and mechanical engineer etc... and so it goes on. Someone I suspect has written a piece on Insurance for Home Extensions.

Any ideas appreciated, apologies this has gone a bit beyond PPI for Architects,

Thank you

My experience with local authorities and most other organisations is the requirement for at least £5 million public and product liability insurance to get past the front door.

I expect it would also apply to any architect on public works.

[Dod101]

I think supremetwo's point is fine but the OP is not building a school or anything like it. Most architects on public works contracts will be substantial practices and will be well aware of the need for good PI cover.

To answer invest2019. I do not think he has at any point mentioned the value of the work involved but presumably fairly modest, under £50,000? If so I would think he could accept say £1,000,000 PI cover. That answers a)

For the rest
b) You are talking about Contractors All Risks insurance, which comes in two parts, damage to the contract works and then third party liability. The contractor may have an annual policy covering all contracts up to a a value of say £1,000,000, depending on the size and capabilities of the contractor but so long as it exceeds the value of your contract that will be fine. They are usually a fairly standard wording, but note that CAR does not mean literally 'All Risks' There will be exclusions. As for the third party limit, again he may have a standard wording, maybe £1,000,000 per claim. You do not want much less.

c)I am afraid I have forgotten much about a JCT contract but just read over it to make sure you are happy with the wording.

d) That seems sensible although a good main contractor will probably be better at chasing sub contractors and so on, that is if you are employing a main contractor. If you are employing individual trades separately that can be a nightmare, but this is getting beyond my area.

If you get decent insurance in place, then your main exposure is being mucked around by the contractor and/or the sub contractors I think and architects on the whole are not necessarily all that good at keeping things under control.

Double check what I am saying because for me this was all a long time ago and someone else may have different views. My views are given in good faith but do not rely on them!

Dod

[invest2019]

Checkatrade gives Insurance Details for providers listed on the CT site.

I ran a search for Architects (RIBA) within my postcode. I was surprised to find 11 Architects RIBA listed, as I think of it more for trades.

The good news the search results seems to broadly confirm what Dod and others are saying re PII for Architects.

a) 11 ARB/Architects within reach of my postcode
b) 7 non VAT registered (to be expected if promoting practice on Checkatrade)
c) 4 VAT registered

Insurance range £5M, £2M, £1M to £500K

Of the 7 non VAT registered (direct comparison to my new start architected)
I - £2M
4 - £1M
1 - £500K
None - £250K

So this would support general feedback and leads me to consider Dod proposal re £1M possibly adequate. My proposed architect is now getting quote from broker for £2m and £1m.

(rationale for this architect is founded in needing back up if I get called away, and as single person not to be "pressured" into decisions by any builder, if in need of back up. The architect has experience a major company level, has worked at length with contractors, though by definition the corporation took care of insurance which now being sorted.

[b]Project estimated at £70K max including garden works and kitchen

Main contractor will co ordinate sub contractors
Architect is legally appointed as project administrator for health and safety etc (as I understand it, which if I do not have an architect, the home owner apparently takes on that risk - yet to confirm but believe to be correct at this point. That I do not want at this stage in life.

Hiscox offer insurance for projects up to £100K as part of the home and buildings cover. The cover on first look seems sound.
Preliminary investigation was a quote of £2200 for a year home contents building extension legal etc which sounds excessive.
If though I changed insurers that would in effect give me my home and valuables and buildings currently about £500, meaning cost to insure for the £70K max cost extension would be say £1800. (Higher than I thought but in theory sounds as though I may be heading in right direction as I think this policy may cover my risks as home owner. On current home insurance really only £50K legal and nothing else as would rest on main contractor insurance - if I have understood this.

Thank you to all for the input.

[invest2019]

CORRECTION Re post below,

I now realise the Insurance amounts checked by Checkatrade and quoted in the post below are for Public Liability Insurance.

Not for Professional Indemnity Insurance.

Nevertheless it highlights the importance of understanding and ensuring proper insurance is in place to cover the project.

Thank you for your patience.

[quote][/quote]

[invest2019]

meaning Correction to Post Above.

[PinkDalek]

meaning Correction to Post Above.

I shouldn't worry on that front, as it could have been below. Depending on the settings set by readers.

https://www.lemonfool.co.uk/ucp.php?i=ucp_prefs&mode=view

Display topic order direction: Descending/Ascending

Interesting research you've undertaken. Helpful to others who are considering such matters. I'm resisting the next building project, certainly until we find out if our neighbour's planning application is successful or not.

[greenrobbie]

When our house extension was built in 2017 we used a chartered architectural technologist to do pretty much everything, from drawing up plans and gaining approvals from local authority, going to tender and advising on the appointment of the main contractor, commissioning structural engineers, on to project oversight.

Her professional indemnity insurance was for £250,000. The main contractor had insurance for £5,000,000. We also informed our home insurers.

Everything was set out in two separate JCT standardised contracts: one a consultancy agreement with the CAT and one a building contract with the main contractor.