Guide to Using the RIBA Professional Services Contracts 2018 - Other - Page 63
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Guide to RIBA Professional Services Contracts 2018
Key watchpoints
• Although the limitation period is 6 or 12 years, this period could be extended
where the statutory period then runs from the date of a claim.
• Be aware of your responsibilities to your employees.
• The retention of the net contribution clause is better for the Architect/
Consultant than joint and several liability.
• Ensure that the Client fully understands the reasons behind the net
contribution clauses.
• This is one of the clauses to be explained to a consumer client.
• Consider your options if the Client wants to omit net contribution.
• Do not omit without checking your insurances or capping your claims limit.
• The level of any cap and the method of calculation must be reasonable.
4.10 Professional indemnity insurance
The Architect/Consultant is required to maintain the specified amount of insurance
cover for the project until, at least, the end of the liability period. This section covers
matters which the Architect/Consultant may wish to consider when assessing their
insurances under the Contract.
As with all Contracts, the Architect/Consultant should familiarise themselves with the
detail within the Contract and take out appropriate insurance. They should obtain
legal advice if they have any doubt about their rights, obligations and liabilities and
the extent to which they are covered by their insurance.
What is professional indemnity insurance?
For many Consultants this is mandatory under their professional codes. It is third party
liability insurance, meaning that the Consultant is covered in respect of their liability to
others. The Consultant receives no benefit themselves, the insurer ‘indemnifies’ them.
Policies will be subject to a limit of indemnity, this being the maximum sum that the
insurers will pay out in respect of damages, interest and legal costs which can be
based on each and every claim or in the aggregate. Cover for each and every claim
means that the limit is payable for each claim in the policy period whereas aggregate
cover means that the limit is only available once. Most policies are for each and every
claim but policies may limit claims for pollution, contamination or asbestos to an
‘aggregate’ basis.
The cover depends on the policy wording together with any endorsements, etc. A
typical policy will cover the Consultant against any sum up to the limit of indemnity, for
which they are legally liable to pay arising from any claim made during the period of
insurance as a result of negligence (in contract or in tort) or breach of duty arising from
their business. Reference should be made to the actual wording for the full extent of
cover as obligations for fitness for purpose or liquidated damages are often excluded.
In contrast to many other insurances, professional indemnity insurances are based
on a ‘claims made’ basis. This means that the insurers who process and pay a claim
are those who are providing the cover when the claim, or circumstances giving rise
to a claim, is first notified to the insurers, rather than when the work was carried out or
the negligence occurred.
Item J of the RIBA Professional Services Contracts 2018 states the amount of
professional indemnity insurance available for the project in respect of each and
every claim out of the same originating cause. However, this excludes aggregate
claims for pollution, contamination and asbestos for which there are options to be
filled in if the insurance is included within the policy. Before completing the figures in
the Contract, the Architect/Consultant should check their policy wording or discuss
with their insurers or brokers.
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