Insurances

Designer's professional Indemnity Insurance

PROFESSIONAL INDEMNITY INSURANCE OF A DESIGNER PROVIDES PROTECTION, IF DAMAGE IS CAUSED TO A THIRD PARTY IN CONNECTION WITH THE PERFORMANCE OF PROFESSIONAL ACTIVITIES (E.G. DUE TO AN ERROR IN SUPERVISION)

Desinger’s professional indemnit insurance can cover designing in scope of:

– building structure (including rad and bridge)

– heat, ventilating, gas, water supply, sewage (including air-condition) systems, installation, devices, plants

– electrical and electric power devices, systems, installations

Desinger’s professional indemnit insurance can cover designing in scope of:

– building structure (including rad and bridge)

– heat, ventilating, gas, water supply, sewage (including air-condition) systems, installation, devices, plants

– electrical and electric power devices, systems, installations

– author’s supervision

-verification of architectural and building design

– carring out expert opinions and proect’s consultancy

Major factors in designer’s professional indemnity insurance (designer’s third PI)

Pure economic losses/financial lossesIn this type of insurance, there is a need to cover not only damage to property (loss of property, e.g. physical destruction of the object of construction works) or damage to person (death, bodily harm or health disorder, e.g. bodily harm as a result of structure’s collapse due to an error in supervision), but also pure economic losses/financial losses (additional costs that are not related to destruction of property or damage to person, e.g. the need to re-build an improperly built structure, which has collapsed). In the case of desinger errors, it is pure economic loss/financial loss that is often involved.
Timeframe of insurance (time triggers)As regards professional indemnity insurance, the insurers have different ways of determining the timeframe for their liability, i.e. what event occurring during the period of insurance they shall be liable for. Professional indemnity insurance of a designer may be offered based on an “act committed” trigger (action or omission, meaning an error made during the period of insurance), as well as a “claims made” trigger (claim reported during the period of insurance).When taking up new insurance, it is important not to change the triggers in an unfavourable manner, or cause a “gap” in insurance, but also to eliminate the limitations of the statutory time limits for claims to be reported by injured parties, which time limits may be included in the General Terms and Conditions of Insurance.
Protection against loss caused by subcontractorsAs regards contractual claims (i.e. claims due to non-performance or improper performance of an obligation), the designer is liable for losses caused by its subcontractors, i.e. for all errors made by the subcontractors, who had been assigned the particular works, even if such subcontractors hold a mandatory professional indemnity policy or a voluntary professional indemnity policy. Therefore, it is very important that the insurance covers losses caused by subcontractors (subcontractor’s professional indemnity insurance).
Determination of the sum guaranteedDetermining the sum insured on the basis of the value of remuneration for the given contract is not a sufficient solution, although it has often been applied in contractual provisions. The sum guaranteed should be determined based on the potential loss that may occur. It should be taken into account that the remuneration for a given contract is many times lower than the value of the structure built, which may collapse as a result of a workmanship error, or there may be a need to re-build the structure.
Protection against losses caused by licensed staffIn accordance with the Polish Labour Code, the employer is liable for the losses caused by their staff. Therefore, in the case of a loss caused by a licensed employee, even if they hold a mandatory professional indemnity policy, the claim will be forwarded to the employer – the contract designer who entered into the agreement with the ordering party. Upon the loss remediation, the employer may recourse a claim against the employee (and possibly effect payout of damages out of the employee’s mandatory professional indemnity policy), however, the liability of the employee is limited to the value of their three salaries and the damages will also be limited to such value (only intentional fault does not limit the employee liability to the value of their three salaries, but even then the mandatory insurance shall not cover the loss). Taking out professional indemnity insurance of a designer ensures protection in the case of losses caused by the employees (usually with exclusion of losses owing to intentional fault).

Contract designer’s professional indemnity insurance (contract designer’s PII) may additionally cover, among other things:

receiving the proper permits and decisions regarding the investment project;
exceeding the budgeted costs, if this results from a loss caused by the insured’s omission and such loss is covered by the insurance;
exceeding the determined deadline for construction works’ completion, if this results from a loss caused by the insured’s omission and such loss is covered by the insurance;
losses originating as a result of office activity, losses caused to staff, losses caused to the premises leased;
losses in the documents entrusted;
retroactive date/ application of cover to losses occurring before the starting date of the insurance period as stated in the policy.