When does a party need to effect professional indemnity insurance?
Professional indemnity insurance (PII) indemnifies the insured against legal liability arising from professional activities. In the context of the construction industry, these activities include architectural and engineering design, cost monitoring and control from quantity surveyors, and procurement and management from project managers. A contractor’s professional activities are likely to include design, particularly on a design and build project, but also on traditional contracts. These often involve the contractor in providing discreet elements of design, as well as management of the day-to-day construction process. It is vital that parties providing these services maintain PII, as their resources are unlikely to be sufficient to meet anything other than minor claims. This is recognised by employers who frequently make PII cover a condition of the contract or appointment.
