Professional indemnity insurance in Northern Ireland
This article provides an overview of professional indemnity insurance (PII) in Northern Ireland.
You can also read:
- Professional indemnity insurance in England and Wales.
- Professional indemnity insurance in Scotland.
- Professional indemnity insurance in the Republic of Ireland.
Contents |
Introduction
Practitioners looking to set up their own practice after being employed by others or starting out with their own practice need to consider professional indemnity insurance (PII).
Where practitioners are offering services to clients, there will be an expectation that those services will be provided with reasonable skill and care and will achieve the client’s objectives. While the majority of projects are likely to be completed to the satisfaction of all parties, sometimes problems will be encountered during the provision of the services or mistakes will be made.
Whatever the case may be, when a project becomes difficult or a client feels aggrieved, there is always a risk that the client may look to make a claim against practitioners for wasted costs, remedial work or any other losses they believe they have suffered. A claim against a practice can be daunting, especially when the client is alleging that they have suffered a loss, but in these cases practitioners can turn to professional indemnity insurance. This is a type of insurance specifically designed to provide cover for claims which arise out of the conduct of professional business.
However, the cover goes further and will also provide assistance when dealing with circumstances that could give rise to a claim. Insurers will provide advice and assistance when dealing with any claims and, should it be necessary, will be there to cover financial losses claimed by the client, subject to the policy excess.
Some practitioners will be required to have adequate professional indemnity insurance by institutes or associations of which they are a member.
Things to be considered when arranging professional indemnity insurance
Cost vs. benefit
While it can often be tempting to go for the cheapest option on the market, especially for practices that are just starting out, it is important to bear the old adage ‘you get what you pay for’ in mind.
It is possible to go on-line and purchase a cheap professional indemnity policy, but it is important to take care to ensure that the product will actually provide the level of cover and support required. Insurers should be able to discuss requirements and provide clear and concise details of the nature of the cover being provided together with details of the services offered.
How much cover is required?
A common question relates to the level of cover that should be purchased, as this can vary from £100,000 to £10,000,000 and will determine the cost of the cover. Unfortunately, as there is no hard and fast rule, it is recommended that practitioners contact insurers to discuss requirements in detail. However, as a starting point, it is important to consider the following:
- What is the value of the project?
- What is the absolute worst case scenario for a project and what would this cost to fix?
- What are the clients asking for as part of the appointment?
These can be daunting questions, but it can have serious ramifications for a practice if they select a level of insurance that may not fully cover any potential claims. As a result, it is a subject that needs to be considered carefully.
How long is it necessary to maintain cover or a certain level of cover?
One of the key differences between professional indemnity insurance and other insurance policies is that it is written on what is called a ‘claims made’ basis. What this means is that it is the policy in force at the time the claim is made that deals with it, rather than the policy in force at the time the work was done.
As an example, a practice is asked to complete a project in 2015, but the client doesn’t make a claim until 2018. As a result, it is the policy in force in 2018 that deals with the claim rather than the cover in place in 2015. It is important to realise therefore that the need to maintain cover will continue long after any projects are completed and may even extend beyond a practitioner’s retirement.
In view of this, it is recommended that cover is maintained throughout the career of a practitioner or operation of a practice, with provisions made to cover any potential liabilities.
When can a claim be made?
Another factor to be considered when selecting the level of cover and the future renewals of the policy is the period within which a claim can be made.
The starting point when considering the period within which a claim can be made is The Limitation (Northern Ireland) Order 1989 which provides that a claim can be brought up to six years after the services have been completed.
However, when considering the period of liability, it is also important to remember the terms of any appointments with the clients as they can also set out clear time limits within which claims can be made or obligations to maintain cover for a certain period of time.
By way of an example, any contract signed ‘under deed’ will create a liability period of 12 years and will often state that the agreed limit of indemnity will be maintained for the same period.
In addition to the implications for professional indemnity insurance, it is important to note that if the level of cover changes, or is not maintained for the agreed period, this may constitute a breach of the contract.
There are likely to be a number of other factors that need to be considered when taking out or renewing professional indemnity insurance and insurers should be happy to answer any questions.
Related articles on Designing Buildings Wiki
- 3D animation for insurance risk analysis.
- Collateral warranties.
- Construction contract.
- Contractors' all-risk insurance.
- Directors and officers insurance.
- Environmental Impairment Liability (EIL).
- Hold harmless agreement.
- Indemnity.
- Insurance.
- JCT Clause 6.5.1 Insurance.
- Joint names policy.
- Limitation of action.
- Making sure your builder has appropriate insurance.
- Performance bond.
- Professional conduct.
- Professional indemnity insurance in England and Wales.
- Professional indemnity insurance in Scotland.
- Professional indemnity insurance in the Republic of Ireland.
- Professional indemnity insurance life cycle.
- Professional Indemnity Insurance clause in conditions of engagement.
- Residual value insurance.
- Run-off cover.
Featured articles and news
Industry Competence Steering Group restructure
ICSG transitions to the Industry Competence Committee (ICC) under the Building Safety Regulator (BSR).
Principal Contractor Competency Certification Scheme
CIOB PCCCS competence framework for Principal Contractors.
The CIAT Principal Designer register
Issues explained via a series of FAQs.
Conservation in the age of the fourth (digital) industrial revolution.
Shaping the future of heritage
Embracing the evolution of economic thinking.
Ministers to unleash biggest building boom in half a century
50 major infrastructure projects, 5 billion for housing and 1.5 million homes.
RIBA Principal Designer Practice Note published
With key descriptions, best practice examples and FAQs, with supporting template resources.
Electrical businesses brace for project delays in 2025
BEB survey reveals over half worried about impact of delays.
Accelerating the remediation of buildings with unsafe cladding in England
The government publishes its Remediation Acceleration Plan.
Airtightness in raised access plenum floors
New testing guidance from BSRIA out now.
Picking up the hard hat on site or not
Common factors preventing workers using head protection and how to solve them.
Building trust with customers through endorsed trades
Commitment to quality demonstrated through government endorsed scheme.
New guidance for preparing structural submissions for Gateways 2 and 3
Published by the The Institution of Structural Engineers.
CIOB launches global mental health survey
To address the silent mental health crisis in construction.
New categories in sustainability, health and safety, and emerging talent.
Key takeaways from the BSRIA Briefing 2024
Not just waiting for Net Zero, but driving it.