VBA Issues Bulletin Regarding Professional Indemnity Insurance
Will your professional indemnity insurance ensure adequate risk coverage?
As a building or property owner, are your service providers, practitioners and contractors adequately covered by their professional indemnity insurance (PII)? Will the scope of your works be covered across the full range of liability?
The PII industry relies far too much on complacency. As such, many clients and practitioners may not be aware of the true extent of their cover. Much less their obligations to maintain their insurance and those of their contractors.
In a bulletin released earlier this month, the Victorian Building Authority (VBA) has announced their intention to ‘continue enquiries to ensure practitioners hold the required insurance… requiring the production of evidence that surveyors hold PII policies that are compliant with the Ministerial Order (29 May 2014).’
This is particularly in response to ‘insurers limiting liability under PII policies for the use of non-compliant building materials… [as] a response to an increase in claims against policies relating to the use of non-compliant cladding in building work.’
Insurance providers’ action puts both owners and practitioners in a difficult position, as their coverage is effectively being reduced relative to a very prescient issue affecting the industry today. This places organisations at risk of suspension until they can attain necessary coverage.
To assist you in identifying whether current policies are appropriate, we have identified three key criteria which should be satisfied to ensure that you or your contractor’s PII will provide a fully compliant and legally defensible position.
1. Will your project require extensions or additional coverage?
Contracted parties and practitioners may require domestic builder’s warranty insurance, construction insurance, or protected work insurance to cover necessary works and take into account site conditions and surrounds. Consulting with an advisory firm within the built-form industry will assist in identifying which PII Policies must be in place to guarantee compliance.
2. What is the scope of works required, and what is the level of inherent risk?
Different contractors, from construction workers to building surveyors, will require different levels of coverage. As such, identifying the unique requirements will help determine whether or not the correct PII is in place.
3. Are there any exclusions in their PII Coverage? Can this be adjusted?
As noted above, the reducing scope of coverage in the light of current industry events has placed a strain on asset owners and contractors to rectify where possible ‘gaps’ in their coverage. Therefore, clients need to identify with their current or prospective providers any existing or potential changes to their coverage and identify whether or not this will impact their ability to remain compliant and legally defensible.
Against industry trends, Hendry has not reduced the scope of our coverage regarding professional indemnity insurance.
We aim to give clients greater security and peace of mind, trusting that services provided by Hendry will be conducted to the highest possible standard, reducing the likelihood of potential indemnifying risks.
Naturally, we endeavour to factor these key criteria in our PII and the coverage of our practitioners and services. As a result, Hendry has maintained a record of zero fault claims levelled against ourselves or our clients to date.