PROFESSIONAL (ERRORS & OMISSIONS) INDEMNITY
Under the Building Act builders have a “duty of care” to build something that is “fit for purpose”. This duty of care applies to all trade professionals as it is also an established principle in cases of negligence.
A duty of care can be owed by:
- a trade professional to their client
- a builder to subsequent purchasers of the property
- sub-contractors to the principal or owner, and subsequent owners
Increasing numbers of cases are being brought against builders and tradespeople, claiming they failed to meet their duty of care to their clients.
Public liability insurance only covers claims for accidental damage to property (or in some cases injury). It does not cover you if the claim relates to an act or mistake where there isn’t property damage but where someone will still be out of pocket.
Professional indemnity insurance will pay your legal bills if you’re held responsible for a mistake that has caused someone financial loss. The mistake could have been made by a subcontractor or someone else working on your behalf, but you’re held liable for their actions.
FOUNDATION LAID TOO CLOSE TO BOUNDARY
A builder in Wellington subcontracted foundation work to another firm, which laid the slab in the wrong place on the property, meaning it was too close to the boundary. This was not picked up until the final inspection and the builder was held liable for the cost of rectifying the problem.
HOW MUCH DOES IT COST?
The cost of being held liable for a mistake that results in someone being out of pocket could easily run into thousands of dollars in legal bills and damages. Compared to this, Professional Indemnity premiums are an essential investment in managing your risk. Request a quote today to see how much your own cover could cost.
POLICY KEY FACTS
This is meant as a summary of the most important items of the policy. For a complete understanding of what it does and doesn’t cover you should always read the full policy wording.
- What you’re legally liable to pay if you or someone employed by you makes a mistake resulting in a financial loss for someone else
- Payment of associated costs and expenses such as legal fees
- Costs incurred by you through mistakes made by your subcontractors and consultants on a job (you’re covered but the insurer may still seek to recover their costs from the subcontractor or consultant)
Because your liability extends for 10 years under the Building Act, cover is available even after you stop trading or retire. This is known as “run off cover”.
WHAT'S NOT COVERED
- Your liability for damage to actual property. For this you need public liability insurance
OTHER THINGS YOU SHOULD KNOW
- An excess of $5,000 is payable for each claim.
- The policy is a “claims made” one. This means cover must be in place when the event occurred (eg. when you built the house) and then continuously until you are first advised of a problem and contact us to make a claim.