Large-scale construction projects frequently have engineers on the team to ensure the development is structurally sound and able to withstand the use for which it is intended.
While this is a move intended to support the project, errors and mistakes can occasionally happen.
In the case of construction, this can have significant consequences, including:
- The financial cost of repairs and claims against the developer
- Risk or injury to site workers or occupants
- Delays in the project’s overall timeline.
Where responsibility for an error or negligence can be laid at the engineer’s door, they may face legal action or claims for compensation from the client.
This is where professional indemnity insurance (PII) comes in – one of a number of insurance policies recommended for construction projects.
Shouldering the risk
PII protects the engineer against claims of negligence or mistakes in their designs, calculations, or advice, particularly if they are serious and result in, for example, someone being injured on the site.
If an error in their work leads to structural defects, delays, or financial losses for the client and legal action results, PII may cover the legal costs and any compensation, ensuring the engineer is financially protected while mitigating the risk to the project.
In this situation, the contracting party would need to:
- Identify the issue and establish that it was due to the engineer’s error
- Notify the engineer of any losses and request rectification
- Negotiate with the engineer for compensation or corrective action.
If this fails, the contractor may make a claim against the engineer’s PII policy.
It is important to ensure that anyone undertaking design works, engineers, architects, surveyors, contractors, sub-contractors have the right level of PII. This is important for those individuals and protects the employer and other interested parties should something go wrong.
Please contact our team for further advice on the role of insurance in construction projects.