When you embark on a self-build project you need to be assured that the professionals who are working with you to make your vision of a new home a reality can be held accountable should their advice turn that dream home into a nightmare.
That’s where Professional Indemnity Insurance (PII) comes in. If one of the professionals – architect, building survey, specialist subcontractor etc – is negligent in the way they have supervised your self-build process and hasn’t ensured that the design is correct or that some of the tradesmen have done their job properly, then they may be a breach of the contract.
That is why your architect, building surveyor or whoever, needs to demonstrate at the outset that they have got PII that will cover a pay out if they are found in breach of contract. The purpose of having the PII cover is so that you know that if you have to make a claim against someone then there will be money to meet the claim.
It’s not a statutory requirement but a practical one, because without being able to prove it was in place when your architect or building surveyor filled out the Stage Payment Certificate, your lender will not drawdown your phased mortgage payment. And if you decide to later sell your property, the purchaser’s lender will refuse to lend if such cover was not in place.
Level of insurance cover
The level of cover should be at least the value of the property that is being built. Most NI architects would have a minimum level of cover of at least £500,000, and more likely £1m or more. In ROI, that level is unlikely to be below €1.3m. Solicitors also have PII cover and this is a statutory requirement – they can’t practice as a solicitor without it. The minimum level for solicitors in NI is currently £3m; in the ROI it is €1.5m.
The professional should offer you a copy of their PII cover schedule at the time that the certificate of works is being given. The insurer is bound to cover any negligence of the architect – or other professional with PII – during the period when the policy is enforced.
If an architect issues a certificate today and it turns out that two years later there was a problem with the house and the architect failed to spot it, then the architect’s negligence arose the day he signed the certificate.
Therefore his insurance in place on that day is there to indemnify him for the claim that the householder will make against him, so therefore the insurer has to pick that claim up.
As long as you see evidence of their PII being in force on the day they sign the certificate for your house, you know that the architect etc. has the insurance in place to indemnify him/her if you end up having to sue.
In most cases, because a lender will be involved in financing the purchase the lender will require the solicitor to check all of that out.