As an Architect, you are crucial to and foundation block to the whole construction process. In the initial stages of a project, an architects work is fundamental to the success of the project. Developers and Builders will be following the advice of the Architect in undertaking the project. Due to the time and costs involved in the development, there is considerable pressure placed upon all parties in the construction process including Architect. As a result, there are potential financial loss exposures from your clients that may arise from the provision of your services.
How can I protect my risk?
In order to protect yourself, a Professional Indemnity policy will indemnify you for liabilities arising from your advice, designs and drawings in carrying out your professional duties.
For example, the types of claims where clients may see potential to seek redress include:
- Failure to properly consider building regulations, city or council planning requirements
- Errors, omissions, and negligence in the preparation of plans, designs, drawings
- Failure to properly consider customer requirements
In essence Professional Indemnity coverage allows you to outsource your time and energy in defending an action to a solicitor who will defend you. If you lose the case and damages are awarded against you, your insurance can make payment.
Do Architects have Professional Indemnity claims?
It is of interest to note the recent figures from APRA relating to Architect associated claims. In 2017 APRA, for every $1 of Premium, Claims incurred was $0.98. Furthermore, individual claim amounts increased from $61,000 in 2016 to $317,000 in 2017. (1)
Based on this information of the dollar claims on average increasing dramatically in recent years, we would recommend that Architects strongly review and consider their policy limits.
With luxury homes, residential towers, retail and commercial properties being in the millions, tens or even hundreds of millions of dollars, there is expectations from owners that properties be defect free. If a case proceeds court, the decision is out of your hands, and in the hands of the judge.
For example, in a recent court case, the judge handed down a judgement whereby the Architect was deemed to be 25% responsible for the total damages. The damages awarded were $5.7M with another $6.8M as payment subject to further submissions.
In addition to Professional Indemnity coverage, other insurances to consider for your business are Office, Cyber and Management Liability.
For a no-obligation discussion on your coverage, please contact Business Insurance Specialists.
(1) PWC Interim Report 24th June, 2019 for Dept of Housing and Public Works