Architect Insurance requirements to protect your risk
Architects provide professional services to their clients. There are significant financial loss exposures and pressures from clients that may arise from these services.
How can I protect my risk?
In order to protect yourself properly, a Professional Indemnity policy will indemnify you for professional liabilities arising from your advice, designs and drawings in carrying out your professional duties.
The types of claims where clients may see potential to seek redress include:
- Failure to properly consider building regulations, city or council planning requirements
- Errors, omissions, and negligence in the preparation of plans, designs, drawings
- Failure to properly consider customer requirements
By having Professional Indemnity coverage in place, you are able to outsource your time in defending an action to a solicitor who will defend you, and in a worst case scenario of damages being awarded, your insurance can make payment.
Do Architects have Professional Indemnity claims?
It is of interest to note the recent figures from APRA relating to claims with relation to Architects
In the most recent figures reported for the year of 2017, for every $1 of Premium, Claims incurred was $0.98. Furthermore, individual claim amounts increased from $61,000 in 2016 to $317,000 in 2017. (1)
Based on this information of the dollar claims on average increasing dramatically in recent years, we would recommend that Architects strongly review and consider their policy limits.
With luxury homes, residential towers, retail and commercial properties being in the millions, tens or even hundreds of millions of dollars, there is expectations from owners that properties be defect free. If a case proceeds court, the decision is out of your hands, and in the hands of the judge.
In a recent court case, the judge handed down a judgement whereby the Architect was deemed to be 25% responsible for the total damages arising from their architectural services . The unfortunate reality was that the dollar value of the judgement awarded was $5.7M to be paid immediately, with another additional 6.8M estimated as a potential further payment subject to further submissions and discussion.
In addition to Professional Indemnity coverage, you may wish to consider other insurances that may be of importance.
For a no-obligation discussion on your coverage, please contact Business Insurance Specialists.
(1) PWC Interim Report 24th June, 2019 for Dept of Housing and Public Works