Design and Build Professional Indemnity……what can go wrong!

As mentioned in previous blogs, contractors do have an exposure to professional indemnity related claims – Examples of matters that can arise and cause significant claims are:

• Design failure – Contractors provided the client with a design and build service in respect of construction of a quarry conveyor belt, capable of carrying tonnes of material. The design of system was subcontracted out to specialists. After catastrophic failure of the conveyor belt machinery, substantial damage was caused. Although the claim was subrogated by PI insurers against specialist designers, the claim was settled against the Contractor for £42,000.

• Alleged specification failure – Major fire at Heathrow Terminal 1 emanating from a fast food restaurant caused multi-million pound damage. Insured, one of 13 defendants added as co-defendants by building insurers. One of many allegations involved the inadequate specification of extractor flue that allowed hot gasses to build. Although the contractor was involved in specification, the claim was successfully defended. Costs £50,000.

• Design failure – Temperature of new cold storage room at factory consistently too high because of inadequate design. Paid £250,000 plus costs.

• Inadequate design – Air extraction and temperature control at restaurant failed to work properly. Restaurant was closed pending repairs. Paid £150,000 plus costs.

• Structural design defect – Incorrect structural calculations contributed to total building failure of new car park. Paid £750,000 plus costs.

• Negligent project management – Contractor instructed in role of project managers on existing but uncompleted development, problem due to bankruptcy of original contractors. Project involved restarting development, i.e. putting it back on track, utilising previous designs but new professional team. Allegations of negligence concerning duplication of work carried out by original team and additional duplications between new team, Surveyors, Engineers and QS. This led to an over-run on the contract budget. Paid £26,500.

For help and advice about Professional Indemnity insurance please contact Ben Butler on 0118 9165481, or complete one of our enquiry forms

Author: Adam Lawrence | March 5th, 2012

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Adam Lawrence
Get in touch:   Reading: 0118 916 5480   London: 020 7036 8767