Advice and design
Professional indemnity
Cover for the financial loss somebody suffers because of your advice, your design or your documentation. It answers when the mistake is professional rather than physical, and it is written on a claims made basis, which changes when you are covered as well as what you are covered for.
For architects, engineers, project managers, and the specialist trades that design as well as build. Send us your appointment and we will check what it requires. Subject to underwriting.
- What it pays
- Financial loss
- What triggers it
- Your advice or design
- Policy basis
- Claims made
- Physical damage
- Not covered
- Poor workmanship
- Not covered
What it covers
When the mistake is on paper
Professional indemnity answers when somebody suffers a financial loss because of professional work you did: advice you gave, a design you produced, a specification you wrote, or a duty you were engaged to perform and did not perform properly. It can cover the damages and the cost of defending the allegation, up to the limit on your schedule and subject to the policy wording.
The distinction that decides many claims is financial loss against physical loss. A wall that falls down is physical, and that is a matter for contract works or liability cover. A design that could never have been built, a specification that sent the employer down an expensive dead end, or advice that cost them money is professional, and that is this policy.
Liability for work you have subcontracted can still land on you. Where the employer engaged you, they will look to you, because they have no contract with your subconsultant. Whether your own policy answers it depends on the wording, and on any condition about your subconsultants carrying their own cover, so check that with us.
In and out
What is in, and what is not
Professional indemnity is drawn tightly around professional work. Most of what it excludes is excluded because another policy is meant to answer it.
Covered
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Negligent advice or design
A design, calculation, specification or piece of advice that was wrong, where the person who relied on it lost money as a result.
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Legal costs
The cost of defending the allegation as well as the damages themselves. Check whether those costs come out of your limit or sit on top of it.
Not covered
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Faulty workmanship
Physical work that was simply built badly. That is a construction matter, not a professional one.
-
What you already knew
Claims, and circumstances that could give rise to a claim, that you were aware of before the policy started. Disclose them when you apply rather than leave them out.
The part people get wrong
This is a claims made policy. It answers claims that are first made against you and reported to the insurer while the policy is live. It does not answer a claim that arrives after the cover has lapsed, even where the work was done while you were insured. That is the single most misread thing about this cover, so if you are thinking of letting it go at the end of a job, speak to us first.
Common questions
Is professional indemnity compulsory?
Not by any general law in South Africa. In practice it is very often required by the contract you are signing, and public tenders regularly make it a condition of appointment at a stated limit. Check the professional services clause in your appointment, and check whether your professional body attaches any requirement to your registration.
What does claims made actually mean for me?
It means the policy has to be live on the day the claim is made against you and reported, not on the day you did the work. Work you did five years ago is only covered if you are still insured now and your retroactive date reaches back that far. Cover that lapses can take your past work with it, unless run off cover is arranged.
What is a retroactive date?
A is the point in the past from which your work is covered. Anything you did before it is outside the policy. Check the date on your schedule, and tell us about your earlier projects before you move insurers, because a replacement policy can start with a later retroactive date and quietly leave your past work uncovered.
What happens when I finish the job or stop trading?
Run off cover, sometimes called an extended reporting period, is designed to keep a claims made policy answering claims that arrive after you have stopped work. Whether it is available, for how long and on what terms is set by the insurer, so ask us before you let a policy lapse rather than after.
Does it cover physical damage or injury?
Not normally. Physical damage and injury belong on or public liability. The exception is damage that flows directly from a design error, where the answer depends on how your policy is written, so ask us rather than assume.
Can I be held liable for work I subcontracted out?
Usually yes. The employer contracted with you, not with your subconsultant, so they will normally come to you and it will be for you to recover from whoever you appointed. Many practices require their subconsultants to carry their own professional indemnity and keep evidence that it was in place at the time.
What is an indemnity limit?
An indemnity limit is the most the insurer will pay. Two things on your schedule decide what it is worth: whether the limit applies to each claim or to everything in a policy year, and whether legal defence costs come out of the limit or sit on top of it.
Your signature on the drawing?
Send us the professional services clause from your appointment. We will tell you what limit and what retroactive date it needs, and what your current policy actually gives you.