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Last edited 30 Jan 2021
Single project professional indemnity insurance
Aimed primarily at large construction projects, SPPI can control the scope of insurable risks and so reduce costs. One of its main benefits is that it gives the project owner/employer/developer full control over the insurance for a project and guarantees that all the diverse interests, liabilities and risks of those involved in the venture are covered. For main contractors and subcontractors working on a specific project, SPPI can consolidate insurance cover into one policy negotiated, purchased and managed by a single sponsor.
- Premium costs to cover the entire project are known right from the start; owners do not have to bear additional costs from premiums relating to contractors' cover for the project;
- Owners have certainty of cover for up to 10 years post-project completion. This compares favourably with annually-renewable policies where there is no guarantee that contractors and sub-contractors will renew their individual policies after completion;
- Projects are usually covered against the true risks as project owners have more control over the type of cover, policy duration and limits of an SPPI policy than they do over their contractors’ individual PI policies;
- Being project specific, the policy cannot be diminished by claims from other projects – as may sometimes happen when relying on a contractor’s annual insurance;
- Avoids the danger of contractors setting their liabilities at an unrealistically low level. This is because SPPI caters to the specific requirements of a project.
- Owners are covered for all contractors and consultants involved on the project, thereby reducing time spent on management and negotiation;
- Owners are protected against delays arising from contractor/sub-contractor bickering over who is responsible for an error or oversight;
- SPPI policies cannot normally be altered or cancelled by insurers as might be the case with annual policies – these can alter at renewal and may not comply with contract requirements;
- Avoids convoluted claims settlement issues by eliminating the need for numerous insurers for each partner in a joint venture.
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