As an engineer working in the construction sector, you probably have plenty of people that depend on the accuracy of your work. If things go wrong, or a client decides to sue, however, you cannot assume you are covered by the project architect or contractor’s insurance. Taking out design and construct insurance offers the protection you need. Here’s what you need to know.
WHY DO I NEED DESIGN & CONSTRUCT INSURANCE?
This specialised policy is ideal for professionals involved in both the design and construction aspects of a build project. It provides coverage for claims arising from design errors, negligence, or omissions, as well as for damage, defective workmanship or injuries during construction.
By covering both the design and construction phases, it provides comprehensive protection, helping you cover any financial losses due to lawsuits or repairs if the project does not meet expectations.
It can help to cover the costs of:
- Compensation awarded to the client
- Legal fees incurred in defending the claim
- Any losses incurred by the client as a result of negligence
WHAT IF I DON’T OFFER A DESIGN SERVICE?
With the growth in ‘design and build’ jobs, building and engineering contractors are increasingly exposed to design liability.
Under this type of contract, the client hands over responsibility for both designing and building a project to a single contractor. The contractor might then undertake work in-house or sub-contract specific elements to specialist engineers.
So, whether you are a structural engineer, a civil engineer, an engineering contractor, or an electrical engineer working on just one aspect of a project, you will almost certainly benefit from D&C insurance.
That’s because, although you may not consider yourself a designer, it’s likely that you make decisions on issues that could be construed as design. For example, if you select fixings and framing for a cladding system, this could be considered a design function.
Increasingly, taking out this type of professional indemnity insurance is considered a pre-requisite, and it is now common for clients to insist that everyone involved in a contract carry their own insurance cover, even if a contractor is doing little or no design work.
WHY DO MY CLIENTS EXPECT ME TO HAVE D&C INSURANCE?
Unlike public liability insurance, which covers legal liability for injuries or damage to property, design and construct professional indemnity covers claims arising from design, advice, or specifications, covering purely financial losses.
Many companies that sub-contract engineering work will expect you to have some kind of professional indemnity insurance for engineers because design errors can be costly. In many cases, the consequences of a design defect far outweigh the value of the work that led to them. Not only that, but errors can lay undiscovered for several years and may be significantly more costly to fix once the building is occupied.
In addition to potential design flaws, design and construct insurance also covers issues on-site such as problems with supplies, workmanship and construction. It typically protects you against risks such as structural collapse or any incidents that might damage materials.
WHAT RISKS DO ENGINEERS FACE?
In most cases, projects are completed without a hitch, resulting in satisfied clients and happy occupants. Unfortunately, however, in the course of your work, you could face a range of claims relating to the accuracy, functionality, and safety of your work.
This could involve both design- and construction-related risks – or sometimes a combination of the two, as the following examples demonstrate:
Example 1:
An engineer designs a multi-story building but underestimates the load-bearing capacity of certain columns leading to a partial collapse. This results in significant repair costs, project delays and potential liabilities for injuries.
Example 2:
An engineer designs a heating ventilation and air conditioning (HVAC) system for an office complex but fails to account for the building’s insulation and heat retention resulting in an underpowered system. The client demands a redesign and retrofit, leading to added costs for parts, labour, and delays.
Taking out design and construct insurance covers both design issues and any potential problems on the construction site, ensuring you are protected at every stage of a project.
GET A DETAILED QUOTE
To ensure appropriate cover for the work you undertake, you may need to speak with an insurance expert, such as OBF.
This is particularly true when taking out design and construct insurance, which works on a ‘claims made’ basis. Just like most professional indemnity policies, claims will be dealt with under the policy in force when the claim is brought, not the policy in force when the work was completed.
This means it is vital to maintain continuous cover and to ensure that your current insurance covers past contracts.
For more advice about the type or duration of insurance you require, contact our experienced team to arrange a custom quote on design and construct professional indemnity insurance.
