A) Professional Indemnity Insurance
The Insurance coverage provided under Professional Indemnity Insurance policies is for awards of damages, costs or settlements (including defence costs) for which the a company or individual is legally liable resulting from a claim made against them during the policy period for any act, error or omission arising out of the conduct of the business. Cover is for matters notified to the insurers in the policy period. The event giving rise to the claim may have occurred during the same period of insurance but is more likely to have occurred before (perhaps many years before). It is because of this that Professional Indemnity Insurance is described as being on a ‘claims made’ basis.
Professional Indemnity Insurance can be obtained through many insurance brokers. Professional Indemnity Insurance is a specialised area of expertise, and many high street insurance brokers either do not deal with this type of cover, or deal with it so rarely that they are not experienced in the various nuances of the cover. Quite often the brokers who are the most experienced in this area are specialists with expertise in this type of cover and normally the relevant Malaysian professional bodies representing Architects, Engineers, Surveyors and other design disciplines have details of brokers who their members regularly obtain such cover. These compiled lists of approved insurers, who normally comprise a mix of Lloyd’s Syndicates and Insurance Companies, all of whom have generally agreed to provide the minimum levels of cover to members of the various professional bodies’ members. Before any professional makes any decision regarding the selection of brokers or insurers it is a good idea to talk to other members to see if they can recommend a particular organisation, or to their professional body who would normally supply a list of experienced brokers .
- The various professional bodies will generally lay down minimum levels of cover for its members in order for them to remain compliant with the professional body’s requirements and practice in their specific field. It should be remembered that these are minimum levels only and may not be appropriate for specific project. Generally the minimum levels are based on fee income bands or similar.
Unfortunately for the Design Team member most underwriters are not prepared to increase the cover just for one specific project, and they insist it is done for all works executed by the Design Team members company.
- In addition if a collateral warranty is required by the Employer then this will mean that the higher cover has to be kept in place for a minimum period of time from practical completion. Thus this extra cost needs to be factored in when deciding the fee for such a project by the Design team member when submitting his fee proposal to the Employer.
- The exception to this rule is where a specific project is of such a size that project cover is attractive to underwriters. Given that there are very high minimum premiums for this cover, the contract needs generally to be of a substantial size, and attract a fee of the size, that justifies this level of premium. Very few insurers offer this cover and it is a specialist area.