Posted on: 24 September 2019

We take a look at the importance of having the right professional indemnity cover in place, the impact of recent events such as Grenfell and how to mitigate increasing insurance costs for the construction sector.

Who needs Professional Indemnity Insurance?

Professional Indemnity insurance (also known as “PI insurance”) is intended to protect professionals and their businesses in the event of claims made by a third party suggesting that they have suffered loss as a result of non-performance, breach of contract and/or professional negligence. In addition to claims of error, omission or negligence, professional indemnity insurance may also protect against slander, libel and breach of contract.

The need for professional indemnity insurance has grown over several decades as more people enter professional service-based occupations. Anyone in the construction industry who gives advice, makes educated recommendations, designs solutions, or represents the needs of others should consider purchasing PI. Professionals such as design & construction contractors, project managers, engineers, architects, planners and contractors are prime candidates for this type of insurance.


PI insurance is intended to protect professionals in the event
of claims made by a third party, suggesting that they have 
suffered loss as a result of negligence.


The current state of the Professional Indemnity insurance market for construction

Factors such as higher settlements, increasing claims frequency, the Grenfell tragedy, Carillion’s demise and hugely competitive procurement processes, means insurers are becoming increasingly selective about the risks they are prepared to underwrite in the construction sector.

In 2019 the market has hardened significantly. Insurers who continue to offer terms in the construction sector are looking to limit their exposures by reducing capacity, increasing premium rates and enforcing coverage restrictions, particularly concerning cladding and fire safety.

How much will Professional Indemnity insurance cost?

The cost of a professional indemnity insurance policy will vary depending on several factors, including the level of cover you choose and the type of work carried out by your business.

Adopting a good risk management ethos, and conducting regular risk assessments, will help mitigate increasing costs. It’s also imperative that your workforce is fully trained including all sub-contractors.

The more information you can provide to your insurance broker regarding your working practices and risk management approach, the better, and try to begin the process as early as possible, to give them time to find the best policy for you.

Insurers are demanding more in-depth information in the run-up to renewals to fully understand your business, adding to the time it takes to provide formal terms and place a policy so be prepared for a more in-depth fact find from your insurance broker.

Count on Premierline

There are many different forms of insurance covers and various factors to consider when purchasing professional indemnity cover for your business. Because there isn’t a standard policy, an experienced broker who understands your company and can knowledgeably design an insurance offering to meet your needs is invaluable. Contact Premierline to learn how professional indemnity insurance fits into your total risk management programme.

Source: Zywave Inc – Cover Overview – Professional Indemnity Insurance

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