A single PI policy for the contract provides more cover certainty for projects than annually renewable PI policies. Project participants have more control over the scope of cover, limits and policy duration. This avoids potential coverage problems with contractors’ and consultants’ own PI policies in the event of a claim
Cover eroded by another claim
This could be a large claim under a completely separate project that the contractor or consultant has worked on, that’s insured on their annual PI policy.
Policy not maintained
When the project is finished project owners have little control over whether contractors and consultants who worked on the project renew their PI policies. (A PI claim can surface years after the events that caused it and the PI policy needs to be in force when the claim is actually made).
With SPPI the cost of the PI coverage for the entire project is known up front and avoids the possibility of incurring additional costs from project participants for their own PI premiums relating to the project.
Having a specific SPPI policy where the cover and limits are specifically designed around the requirements of the project, safeguards the project participants and project owners from all of the above issues.
Project owners relying on their contractors’ and consultants’ annual PI policies can also face prolonged delays and extra costs when a PI claim arises because of the need to prove which consultants or contractors are liable for the loss and also their share of liability:
Overlapping project involvement
Proving liability against an individual project participant party can be very complex as several parties may have had different degrees of involvement at different times around the issue that is the subject of the PI claim.
The presence of different PI policies for the professionals involved in a project means that the individual insurers involved will defend their policyholders’ interests as well as they can – causing inevitable delay and expense.
Even after different parties’ responsibilities for the loss has been acknowledged, disputes may arise over the exact apportionment of costs because of different approaches to claims settlement by the various PI insurers involved.
Our SPPI policy avoids the delay and expense of construction professionals defending their individual positions by insuring all the professional parties under the same policy.
An SPPI policy covers all parties that provide professional services to the project which means that the cover is consistent and the premium cost is known by all at the outset of the project:
The SPPI cover and limits applies to all of the insureds: subsidiaries, consultants, and sub-contractors. This ensures consistent coverage across all parties involved in the project and smoother claims handling.
Compared to the unknown cost of construction professionals’ own PI insurance, the SPPI premium for the extent of the project is transparent and known upfront, avoiding the possibility of incurring additional costs from project participants for their own PI premiums relating to the project.
The SPPI provides certainty of coverage for the lifespan of the project plus a discovery period of up to 10 years or longer.
Many of the benefits outlined for owners are also advantageous for Joint Ventures formed by consultants and contractors pooling their resources and expertise on large construction projects:
Having an SPPI policy in place means that individual contractors and consultants do not need to expose their own PI coverage (and PI premiums) to the risks presented by other parties in a Joint Venture.
Annual policies do not usually provide full cover for Joint Ventures, whereas the SPPI is structured around the requirements of the project and its limits remain in place regardless of any claims against individual joint venture members’ annual PI policies.
Efficient long term claims resolution
The SPPI’s joint defence provision avoids disputes between Joint Venture members over liability for claims – not just during the project but also for a discovery period of 10 years or more after completion giving certainty of response.
The total cost of Professional Indemnity insurance coverage for the project is known at the outset which means the Joint Venture can make budget provision and charge the costs to the project.
All SPPI clients are entitled to 4 hours complimentary service from specialist construction lawyers for confidential reviews of the construction contracts the client is entering into and expert advice about them, e.g.
The solicitors can advise the client about issues in the draft contract that are inconsistent with the scope of cover under the SPPI. They can identify provisions of the draft contract which, if they were to give rise to a claim, may not be fully covered or which might present coverage issues.
The solicitors can also identify legally onerous or unreasonable contract clauses inconsistent with the scope of obligations that one would normally expect to see in documentation typically used for the appointment of a construction professional in relation to projects of similar scope and complexity.
They may recommend the amendment of a clause and will set out a proposed alternative wording, along with an explanation as to why the clause is regarded as legally onerous and why it should be deleted or amended. Such explanations should assist in contract negotiation.
Wider contract reviews
Clients may request an analysis of the draft contract’s standard of care, scope of services, limitation of liability and insurance provisions of the proposed contract as well as insurability or the identification of unbalanced or potentially harmful contract terms.
These reviews are for the sole benefit of our clients Insureds attorney/client privilege will be maintained relative to these reviews. They are for the sole and explicitly not for risk evaluation/underwriting purposes.