What is Professional Indemnity insurance?

Professional Indemnity (PI) insurance covers legal costs and expenses incurred in your defence, as well as any costs that may be awarded if you are alleged to have provided inadequate advice, services or designs that cause your client to lose money.

Many professions need to have PI as part of their respective industry body’s regulatory requirements. Even if you are not obliged to have PI insurance, without it, you could be liable for hefty legal fees and/or compensation payments.

Cover areas:

  • Breach of confidentiality
  • Breach of intellectual property rights
  • Collateral warranties – claims arising from these are explicitly covered with no limit on assignments
  • Dishonesty
  • Libel and slander
  • Loss of documents
  • Professional negligence of the policyholder and their designers, consultants and subcontractors
Consulting Engineers:

The following are most relevant to a Consulting Engineers’ policy type – i.e. B&ES, Civil Engineering, Electrical Engineering, Geotechnical Engineering, Mechanical Engineering and Structural Engineering.

Civil works to embankment –

Collapsed due to unstable subsurface conditions not being detected by geotechnical engineer. Settled for £500,000.

Design of highways and service roads on £2million superstore project –

Failure to locate previous pilings in the area and insufficient access allowed for articulated vehicles. £80,000 remedial costs.

Design of heating system in factory –

Refurbishment proved inadequate following miscalculations. Extra units required, costing £29,000.

Breaches of building regulations –

Claim filed against the engineer and eight other parties on the contract. This scattergun approach used by solicitors incurred significant costs even though claim was successfully defended.

Engineer provided wrong specification for electricity supply to site contractors –

Alterations and temporary generator required £28,000.

Specification and supply of 'load cells' within a definite accuracy for testing purposes –

Cells found to be underperforming and eventually rejected. Cost: £42,000.

Refurbishment of noise test facility –

Contract terminated citing delays due to design inadequacies, requiring complete re-fabrication to comply with pressure-equipment regulations. Claim: £1,500,000.

Shopping Centre Project

The claimant sub-contracted to the insured the M&E installation work on part of a major new shopping centre project. The electrical installation designed/constructed by the Insured was allegedly performed in breach of contract and urgent remedial works were completed – Settled £200,000/Costs £32,000.

New Primary School

The Insured was instructed by the main contractor to design, supply and construct the timber frame for a new primary school. The claim concerned the structural failure of the school’s floors/ceilings, leading to its closure, remedial works and associated costs. The cause was originally considered to be the failure of the glue product used rather than the Insured’s specification. However, following the disclosure of new expert evidence, the claim was amended to include design defects – Settled £110,000/Costs £15,000.

Luxury House

The insured piling contractors were appointed to provide piles to support foundations at the claimant’s new luxury house. Following cracking to the property, experts were appointed who concluded that many of the piles were incapable of supporting the loads from the building structure, and that this caused the foundations to settle and the building to crack. In addition a significant number of the key piles were not installed to the insured’s design set and the expert’s report confirmed that the insured negligently installed the piles and was therefore responsible for the damage that occurred. This claim was settled at mediation where the PL insurer paid the lion’s share of liability – Settled £125,000/Costs £24,000.