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13 And relax!!!

14 Who are we?

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16 Why do you need Professional Indemnity Insurance? Members of CIAT provide a professional service to their Clients, and the Clients rely on this service. The provision of the service creates a Duty of Care to the Client. Any breach of this duty (negligence or other civil liability) that gives rise to a loss to the Client can give rise to a claim. The Professional is then faced with costs in defending such a claim and potentially meeting the financial losses suffered by the Client. It is required in order to comply with the CIAT Code of Conduct

17 What is Professional Indemnity Insurance Professional Indemnity Insurance is designed to provide protection in respect of claims made against the Architectural Technologist and which arises out of the professional business. This cover will generally include: Any costs incurred in defending the claim. Costs incurred in settling any claim (usually the costs of rectifying the works). Any costs incurred by the Claimant in bringing the claim. In the majority of cases, the most the Architectural Technologist will need to pay is the policy excess regardless of the size of the claim.

18 Do I need PI Insurance? Short answer, yes. Not only is it a requirement of your Code of Conduct, if you have provided a professional service you are potentially liable should a claim arise. A claim can proceed regardless of whether or not you have insurance and could leave you facing a significant loss especially if lawyers are involved. Far better to have the cover and not need it, than to need it and not have it.

19 Arranging cover When arranging cover there are a number of factors that are considered by Insurers which will include: Type of work being undertaken; Limit of Indemnity required; Fees generated from professional services; Largest contract value; Claims History. Each can have an impact on the availability and price of the policy.

20 What you need to consider Limit of Indemnity: Cover can be provided to almost any limit, and there is no hard and fast rule to follow in deciding the policy limit appropriate to your business, but the following should be taken into account when selecting an appropriate level: The type of project The value of your largest contract. The potential costs should that contract go catastrophically wrong. Any contractual obligations to maintain a certain level.

21 What you need to consider Period of Cover how long do you need it for? Professional Indemnity Insurance is an annually renewable policy, written on a Claims Made basis. This means the policy which is force at the time the claim is made will respond to the claim regardless of when the work was done. Cover should therefore really be maintained for as long as you may be liable for a claim. How long can you be liable for a claim? Under the Limitation Act 1980, you are liable for 6 years from the date you completed your services. However, this is extended by the Latent Damages Act 1986 to 3 years from the date the Client could reasonably be expected to know there was a problem. Although liability is subject to a absolute time-bar after 15 years (the Long Stop provisions). However, you may also have accepted a contractual obligation to maintain cover a period of up to 12 years from the completion of the Services.

22 What happens if I retire? The services you provide may well have the potential for claims to arise long after the work is completed, and this combined with potential responsibilities under the terms of any contract, means that you could face claims for some considerable time. Bearing the above in mind, if you are considering retirement, you should give serious consideration to arranging Run-Off cover for an appropriate period. This is a policy put in place to cover any claims that arise after you have ceased providing services. Cover is usually provided for a further period of between one and six years with pricing dependent on the type of cover selected.

23 Why CIAT Insurance Services? Why should you obtain your insurance through CIAT Insurance Services Ltd? A Bespoke policy offering a broad scope of cover to members of CIAT; A discounted rate for Chartered Members; Access to a Legal Helpline and Contract Document Review Service at no additional cost You will be dealt with by a team with considerable experience in dealing with CIAT members and all the issues you can face while dealing with your insurance arrangements.

24 Benefits of the CIAT PI Policy? What other benefits are provided under the CIAT Insurance Services Policy? Full Civil Liability Coverage Inadvertent non-disclosure/breach of policy conditions protection Pollution cover, in the aggregate with one full reinstatement of the limit Cover for Criminal Prosecution Defence Costs up to the full limit in the aggregate Mitigation of loss cover Disputed fees cover Cover for breach of your copyright Self-Employed Persons Cover Legal Defence costs, which fall outside the standard costs coverage to a limit of 100,000

25 Benefits of the CIAT PI Policy? What other benefits are provided under the CIAT Insurance Services Policy? Fidelity Cover- up to 100,000 No Virus exclusion Loss of Documents Cover Joint Venture/Consortium Cover Compensation for Court Attendance per day to a total of 100,000. Design & Construct cover automatically provided for Professional Services carried out under such contracts. Ability to offer 6 year run off policies should you cease trading (subject to qualifying criteria). The financial strength of a Lloyds Insurer with a Standard & Poors rating of A+ (strong)

26 Frequently Asked Questions While we have a captive audience. No, you shouldn t agree to certify a project you haven t been previously involved with. No, you shouldn t consider extending your liability under a Practical Completion Certificate. Your professional indemnity insurance is not akin to a building warranty. The client is not covered by your policy. Working for a friend or offer a professional service as a favour may well still create a duty of care in the provision of your service, irrespective of whether a fee charged. Yes, you can act as the Principal Designer.

27 Claims

28 Claims While most firms may avoid claims for a great many years, for many they are an unavoidable fact of life. Between 2008 and today s date, Members on the CIAT Insurance Facility have received approximately 550 claims. While many notified matters may ultimately not progress to a formal claim, those that do, have cost the profession and insurers over 3.5 million to date and will probably develop further adding to the total cost.

29 Example 1 The Client has tried to manage the project on their own, but discovered there was more work than they envisaged. They are now looking to appoint a Contract Administrator, but as the project is already in trouble, the project ultimately costs more than originally anticipated. Between the additional costs and expenses and any issues with the Contractor, the Contractor Administrator can often face a claim having signed off the Project.

30 Example 2 The Client appoints the Contract Administrator to provide a Certificate of Practical Completion, but no other inspections have been undertaken. The CIAT member inspects the property and signs the certificate. After the sale of the property, the Purchaser notices a defect in the property and makes a claim against the CIAT member on the basis of the Certificate.

31 Example 3 The project goes through a number of revisions prior to planning permission being obtained and the Client being satisfied. Once the Project has the relevant sign-off, the CIAT member provides the drawings to the Contractor. Unfortunately, they issue an earlier drawing, which isn t noticed and the Contractor proceeds in line with those drawings. The Client incurs additional costs to rectify the work, be it alterations in design or the setting out of the Project, and they look to recover these from the Designer.

32 Example 4 The project is completed and, on the face of it everything appears to be satisfactory. However, not long after, the Client reports a defect in the Works which is causing them concern. In some cases, they may appoint another firm to review the situation on site and this can lead to the suggestion that the product used wasn t appropriate in those particular circumstances.

33 Example 5 The Architectural Technologist is asked to provide some advice to a friend in relation to an extension to their property. There are no formal terms and no fee is charged for the work. However, the extension does not go to plan and the Client looks to make a claim. If the Client has relied on the Services (regardless of who they are or what fees has or hasn t been charged) the Architectural Technologist is potentially liable for the claim.

34 Can they be avoided? In most cases, the sad truth is probably not. A dissatisfied Client is often likely to look for some form of compensation (be that a formal claim for redress, or to seek reduction of fees to avoid a claim), regardless of whether or not you believe the complaint has merit. However, while you may not be able to avoid a claim completely, there are a number of things to keep in mind to help mitigate any potential impact.

35 Tip 1 Manage the Clients expectations. In the majority of cases, the Client may not have a clear understanding of the services being provided. Always make sure that the Services are clearly explained and set out in writing and that their goals are realistic.

36 Tip 2 Carefully review any documentation before it is sent. Whenever anything is being issued, be it to the Local Authority, the Contractor or the Client, you should always take a moment to make sure it is the correct document. In this age of s, when people expect an instant response, we can often attach the wrong thing.

37 Tip 3 If it isn t written down, it probably didn t happen. When dealing with a claim there can will generally be the expectation that the professional will have a file detailing all aspects of the complaint. As such, the client should be kept advised of any alterations, variations or issues in writing, with their instructions or response provided in a similar fashion. If a dispute does arise, you can then refer back to the previous correspondence which can often resolve matters without a claim being made.

38 Tip 4 Terms of Engagement As with the last tip, this can be key to dealing with a claim. Always make sure formal terms and conditions together with a scope of services have been agreed and accepted.

39 In the event of a claim The policy requires you to notify claims or circumstances which may give rise to a claim. What does that mean? If the Client has expressed some dissatisfaction about your services or is looking for compensation contact us as soon as practicable. While your views on the claim are important, the fact you do not believe a claim is legitimate does not mean it is not notifiable.

40 The Claims Process Once you became aware of a claim or circumstance you should: Contact us as soon as practicable, especially if your policy is shortly due for renewal. Following the notification, you will be contacted by BLM, a firm of Solicitors instructed by Insurers to assist in dealing with the claims. Provide BLM with every assistance in dealing with the claim. At any time throughout the life of a claim, we are on hand to answer any questions or concerns you may have.

41 The Claims Process Once you became aware of a claim or circumstance you should not: Attempt to deal with the matter yourself. Decide that the Claim is spurious and opt not to notify it. Make any admissions of liability or offers of settlement. I make no apologies for repeating myself here, please remember, that at any time throughout the life of a claim, we are on hand to answer any questions or concerns you may have.

42 Your Obligations As with any contract, your Professional Indemnity policy contains a number of obligations. Must notify as soon as practicable and within the policy period. Must co-operate with Insurers in investigating the claim. Must not admit liability or make any offers of settlement without prior approval. Must not incur any costs in dealing with claim without approval. If you receive a Notice of Adjudication, this must be reported immediately.

43 What can go wrong? What happens if the terms of the policy are breached? Depending on the nature of the breach Insurers can: 1. Reduce any payment for claim because of any prejudice caused to Insurers. 2. Decline to cover the claim. If there are any policy issues raised in connection with a claim, we will assist you in dealing with any concerns, present information in the appropriate manner and attempt to resolve matters.

44 Any Questions? If you don t have an opportunity to raise any questions during this presentation, or if you have any more general queries regarding any aspect of your PI Insurance please contact either: Mr Darren Hewitt LL.B (hons) Mr Joseph Aspinall Manager Manager Claims & Risk Management CPA Division Tel: Tel: darrenh@ciat-insurance.co.uk joea@ciat-insurance.co.uk