Practical Post 21: What happens if your PI insurers won’t cover a claim?
by Bregs Blog admin team
Practical post 21: What happens if your PI insurers won’t cover a claim?
There has been a lot of discussion in the past year about professional indemnity (PI) insurance. The ‘comeback’ for homebuyers is that they can sue the builder and the Assigned Certifier who signs off on their work. The Certifier will be signing off that the drawings comply with technical standards in the regulations and that the finished building complies.
So the intention of the new regulations is that a homebuyer who finds a problem (say a defective heating installation) has the name of the builder and certifier and can sue them in court. At that point several things will happen:
- A claim will be made against everyone involved- the builder, subcontractor, boiler manufacturer, mechanical and electrical engineer, architect, the certifiers. All of them will have to get legal advice and notify their insurers immediately.
- Perhaps the builder has liquidated the development company set up for this project. So he’s off the hook.
- Perhaps the manufacturer is in another country, so there is no point trying to pursue him through a foreign court. He’s off the hook.
- Perhaps the sub-contractor only provided a badly worded Ancillary Certificate. The legal advice is that he is not a good mark. He’s off the hook too.
So the full claim is against the Assigned Certifier. He signed off and ‘certified’ that everything was in compliance. It’s not.
At that point the Ancillary Certifiers insurers are in control. Perhaps they settle the claim (on behalf of the Assigned Certifier) and the Certifier is obliged to pay the €10,000 excess that is in the PI policy.
Perhaps there is a clause in the PI policy that let’s them out of paying (for example a specific exclusion like pyrites).
It doesn’t stop there: PI is a protection for professionals but if the PI policy stops short the claim DOES NOT GO AWAY.
The Assigned Certifier, if found negligent by even 1% could be forced to pay the entire claim and legal costs (under the Civil Liability Act). Liability is not necessarily in proportion to responsibility under irish Law. The PI may not cover the claim.
Professionals have lost their practices, their livelihoods and even their homes over negligence claims where they are the LAST MAN STANDING.
For Practical Post Series 1-20 | BRegs Blog click here
NOTE: This series of posts is not meant to undermine or be in opposition to any professional advice from registered representative bodies: rather it is to offer additional technical aids to those that find themselves in the unenviable position of having to deal with SI.9 in it’s current form at present. As with all information posted on the Blog we urge all practitioners to check with their respective professional bodies before assuming any roles or duties under Building Control (Amendment) regulation (SI.9 of 2014). We hope to post a number of these practical posts and list in one area, so home owners, SME’s and professionals can drop in and click on a particular topic to get summary information that may be useful to them while working within these new and difficult regulations.