If your business is involved in both the design and the construction of building projects, you’ll need a specific type of business insurance.
The cover you need is professional indemnity insurance, but more specifically, design and construct (D&C) insurance.
We’ve put together a comprehensive guide about the cover, but if you’d prefer to speak with an expert or request a quote, please call us on 1800 808 800.
In this guide we’ll cover some important questions regarding design and construct insurance, which is also commonly referred to as D&C insurance.
You can jump straight to the relevant sections below:
- What is professional indemnity insurance?
- What makes design & construct insurance different?
- Who needs this cover?
- What if I’m subcontracting out the design work?
- Next steps
If you’d prefer to speak with one of our building industry experts, please call us on 1800 808 800.
We’ve been helping trade and building businesses for over a decade.
What is professional indemnity insurance?
The first step is knowing what professional indemnity insurance is and why you need it.
This form of insurance will cover you in the event that your professional services – in this case your design work – results in a loss to the client.
Such a loss could be as a result of:
- Design or specification errors
- Incorrect or inaccurate advice
- Breach of professional duties
- Negligence
Traditionally it was the professions such as architecture and engineering that required professional indemnity insurance.
But with more builders getting involved in the design aspect of building, whether in-house or outsourced, design and construct insurance has become increasingly important.
What makes design & construct insurance different?
Professional indemnity insurance has traditionally been about covering advice or professional services where a separate fee has been charged for that service.
For an architect, accountant, lawyer etc it is very clear that their fee is for their advice.
Many of these policies will exclude physical construction work, as they are designed for covering professional work, not physical work.
But what if you’re providing design services as part of your building business? Then it’s not so clear.
As a builder you’ll have public liability insurance and perhaps contract works insurance, but neither of these will cover negligence in your design or advice.
A design and construct professional indemnity policy is what you’ll need for complete coverage.
Please note that design and construct insurance does not replace public liability or contract works insurance.
Who needs this cover?
Any building business that is also involved in the design aspect will require this form of insurance.
Likewise, any design business that is also involved in the construction process will need this cover.
What if I’m subcontracting out the design work?
You might think that by subcontracting out the design work you are not responsible for such work.
This is not always the case however. As you are invoicing the client for the work, you are ultimately responsible and will most likely be dragged into any legal action.
The same goes for any consultants you are engaging as part of a building project. If you are invoicing the client for the work, you may still be liable.
If the matter was to end up in court it may well be found that the party you subcontracted the work to is liable, but you’ll still be out of pocket for the legal defence costs along the way.
Another potential exposure is that the design or consulting firm has gone out of business, which could leave you having to cover the entire exposure.
The only way to avoid this exposure is to have the client contract directly with the design or consulting firms.
Alternatively, the appropriate design and construct insurance policy will provide protection for when things go wrong.
Next steps
At Trade Risk we have specialised in the building industry for over a decade. We understand the risks involved in the industry and how to insure against them.
Over 4,500 builders, tradies and construction professionals trust us with their business insurance needs.
Some of the insurance types we can assist with include the following:
- Public liability insurance
- Professional indemnity insurance
- Contract works insurance
- Tools / plant & equipment insurance
- Personal accident insurance
Those are just a small selection of the policies we help builders, tradies and other construction professionals with.
For more information please call our friendly team on 1800 808 800.
