PROFESSIONAL (ERRORS & OMISSIONS) INDEMNITY INSURANCE
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 loss of use of undamaged property). It does not cover you if the claim relates to an act or mistake where the other party suffers only a financial loss.
Professional indemnity insurance will pay your legal bills if you’re held responsible for a mistake in your professional service. 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
COUNCIL INSPECTIONS NOT ARRANGED
JOINERY INCORRECTLY MEASURED
CONSTRUCTION PROJECT DELAYS
In this case the Insured was a project manager on a leaky building remediation. Unfortunately, the project ran into issues during construction requiring further cost and time than originally expected or budgeted. The building owners brought legal action against the Insured, the construction company, architect and engineers, claiming damages for the additional costs.
While it is likely that the Insured has considerably less liability than the other parties their professional indemnity cover responded to cover their legal defence costs, where were significant. If the Insured did not have professional indemnity cover they would have had to cover the full cost themselves, despite only having minimial liability for the claim.
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.
Professional Indemnity Insurance
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
- The cost of defending complaints made to the LBP Board (or other disciplinary boards)
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)
- Claims associated with the failure of a product to meet its manufacturer’s specifications (this should be the manufacturer’s liability)
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