subject: PI Insurance: Engineered for success [print this page] PI Insurance: Engineered for success
Due to the nature of their work, engineering consultants may find themselves involved in litigation many years after the work has been completed. Whether the work was faulty, or the problem is simply a matter of natural wear and tear, a court case is still a court case. Legal fees have to be paid and the resulting bill can be a large one to bear especially for those freelance contractors who lack the financial might of a company to back them up.
In 1995, owners of a hotel retained an engineer to design a specification for remedying structural defects at the hotel. The remedial work to the engineer's design was completed in 1997. In 1999, the hotel owners noticed that the lintel above a window had moved and the surrounding structure had cracked. Further remedial works had to be carried out.
The hotel issued proceedings against the engineer in 2003 for breach of duty in contract and in tort claiming the cost of remedying the defects which had appeared in 1999, and consequential losses. Another case involved a consulting engineer who had designed a roof which proved to be defective. The compensation awarded against him was 1,350,000. The consultant engineer's recourse in such events is their professional indemnity insurance policy. Professional indemnity insurance protects the policyholder against their legal liability for losses suffered by clients as a result of their negligent advice or services. Professional indemnity insurance is already legally required in certain professions, such as law, accountancy and financial services. Whilst it isn't yet a legal necessity for consultant engineers, professional indemnity insurance has repeatedly proven itself to be a personal necessity.
Examples where having such a policy pays include a case where an engineer was responsible for the service roads and drainage to a new business park development. Soon after occupation took place it was found that during heavy rain, minor flooding was occurring on the roads. The engineer's policy paid for the extra costs in designing and implementing extra drainage units. Another example is an engineer who was prosecuted under the Construction Design and Management Regulations 1994 for failing to maintain a safe working environment. His professional indemnity insurance policy defended him right through to the point at which the court decided criminal liability.
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