Professional Indemnity policies provide cover in respect of actual or alleged errors or omissions and/or breach of professional duty.

The policy will include cover for defence costs as well as the settlement award. Sometimes the defence costs are provided in addition to the policy limit (i.e £1m / £2m etc), but sometimes are included within the policy limit (costs inclusive basis).

The potential risk can be assessed by the type/amount of design/advice work undertaken. Some contractors simply ‘construct to specification’ and provide very little design or advice. Other contractors may provide a full in-house design/advice service. Some contractors outsource the design/advice aspect of the work.

Some Professional Indemnity policies will provide cover in respect of liabilities assumed under a Collateral Warranty. Usually such cover will exclude Fitness for Purpose guarantees and/or additional liabilities which extend the policyholder’s usual legal duties.

Exemple

Claims can arise from various issues, including actual or alleged negligent design or specification (i.e mechanical and electrical system not operating as predicted in the design)