Architects Professional Indemnity Insurance

Professional indemnity insurance protects architects and architectural practices against claims alleging errors, omissions or breaches of professional duty in their work. Depending on the policy wording, it can cover legal defence costs and compensation arising from matters such as design errors, incorrect specifications, inadequate advice, inspection failures and problems with project certification.

UK architects in business or practice are expected by the Architects Registration Board (ARB) to maintain adequate and appropriate professional indemnity insurance. ARB currently expects a minimum limit of £250,000 for each and every claim, although the appropriate limit will depend on the scale and nature of the work undertaken, contractual requirements and the potential financial consequences of a claim.

We are a specialist insurance broker and since 2011, our experts have been arranging professional indemnity insurance for SME architectural practices across the UK. We work with new practices, established firms and multidisciplinary businesses, helping them present their risk clearly to insurers and secure suitable cover on competitive terms.

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Why architects choose PIIB

PIIB helps architectural practices across the UK arrange and maintain professional indemnity insurance. Our specialists support clients throughout the policy period, from presenting their risk and negotiating cover to dealing with policy changes and claims.

• Specialist experience in architects’ professional indemnity insurance.
• Access to established professional indemnity insurers.
• Cover arranged with current ARB expectations in mind.
• Support for new practices and established architectural firms.
• Assistance presenting complex or higher-risk work to insurers.
• Help reviewing limits, excesses, exclusions and retroactive cover.
• Support during claims and difficult insurer negotiations.
• A dedicated point of contact throughout the policy period.

Do architects need professional indemnity insurance?

Architects registered in the UK are expected under Standard 4 of the Architects Code of Conduct and Practice to ensure that adequate and appropriate professional indemnity insurance is maintained when undertaking professional work.

ARB currently expects architects to hold a minimum limit of £250,000 for each and every claim. This is a minimum expectation rather than a recommended limit for every practice. A higher limit may be appropriate because of the value and type of projects undertaken, contractual requirements, previous work, client expectations and the possible financial consequences of an error.

Architects should obtain advice about an appropriate limit and check whether their policy contains restrictions relating to particular activities, materials, building types, fire safety or cladding. Cover remains subject to the policy’s wording, conditions, exclusions and excess.

What does professional indemnity insurance for architects cover?

Policy wordings vary, but Architects’ professional indemnity insurance covers civil liability for mistakes in your professional services, paying for defence costs and any damages or settlements you are legally liable to pay within the policy terms and conditions. UK architects in business or practice are expected under Standard 4 of the Architects Code of Conduct and Practice to ensure that adequate and appropriate professional indemnity insurance is maintained. Cover will normally include :

• Professional negligence errors or omissions in design, drawings, specifications, advice or supervision that causes the client a financial loss. For example, design defects, structural issues or costly remedial works.​
• Legal defence costs including solicitors, counsel, experts, court fees and representation.​
• Compensation damages and settlements you are ordered or agree to pay, including out‑of‑court settlements in mediation or arbitration.

Area of Cover	Examples
Design and specification	Errors in drawings, calculations, specifications or material selection
Professional advice	Incorrect advice about compliance, feasibility, cost or buildability
Inspection and certification	Alleged failures in inspections, supervision or certification
Legal defence	Solicitors, experts and other costs incurred defending a covered claim
Compensation	Damages or settlements for which the practice is legally liable
Previous work	Claims arising from earlier work, subject to the retroactive date

Policy wordings vary. Cover depends on the circumstances of the claim and the policy’s terms, exclusions, excess, limit and retroactive date.

Examples of specific risks for architects

There are many different scenarios where the professional indemnity policy is claimed upon. Examples include :

• Faulty or inadequate design leading to defects including damp, water penetration, cracking, fire‑safety issues or a building not being fit for its intended purpose.​
• Incorrect advice or misstatements about buildability, compliance, costs, or programme that result in delay, abortive works or additional expenditure for the client or funder.​
• Breach of professional duty in inspecting, certifying or supervising works, including issues around certificates of practical completion or failure to detect obvious construction defects.

Architects Guide to Professional Indemnity Insurance

It's important to have some understanding of how this market works to be able to make an informed decision on which product is best for your firm.

Whether you are a new-start firm or already buying professional indemnity insurance, our guide covers the following key points:

• How much does architects’ professional indemnity insurance cost?
• What is the insurance 'rate'?
• Getting a quote for professional indemnity insurance
• How is the premium calculated?
• What information is needed for an architects’ PI insurance quote?
• How much cover does an Architect need?
• The professional indemnity insurance market for architects
• Examples of claims against architects
• Why is it important to read the policy?
• What is a retroactive date?
• Do architects need run-off insurance?
• How to present your practice to insurers
• What architectural work is considered higher risk?
• Fire-safety and cladding cover
• Frequently asked questions
• Why choose PIIB?

How much does it cost?

In normal market conditions, rates for architects' professional indemnity insurance typically range between 0.5% and 3% of fee income, depending on the usual risk factors and market competition. Rates can also be higher or lower than this depending on the work undertaken, the claims history etc. Rates are discounted for new start firms as there is no history or legacy to insure.

You should also bear in mind that minimum premiums will also apply which can vary considerably between insurers. For example, a minimum premium for an architect could be £ 500 or £ 1,000, depending on the insurer selected. The minimum premium is the insurance company's starting premium for insuring any risk.

It's not good practice to buy architects' professional indemnity insurance online as a 'commodity' purchased only on its price. However good the policy wording is, professional indemnity is commercial insurance and coverage disputes can still occur. Most policies will require some tailoring to the policyholder, so use a specialist broker to get some good advice.

What is the insurance rate?

The insurance 'rate' is the percentage of fee income or turnover an underwriter requires to provide the insurance cover. It is decided upon by using the usual risk factors including type of profession (architecture, engineer, surveyor etc), the breakdown of activities, any prior claims etc. to calculate the 'rate'. This is then applied as a percentage to a firms rateable fee income or turnover. For example, if an underwriter decide they require a rate of 1% to insure an architecture firm with a fee income of £ 100,000, the annual premium quoted will be £ 1,000 (net of insurance tax).

Getting a quote for professional indemnity insurance

Professional indemnity is complex commercial insurance. When arranging this cover, most firms will require some tailoring of their policy to ensure it provides exactly the right protection for their business. This may be a small tweak to the policy or something more substantial....things that really matter when a claim occurs!

When buying this type of commercial insurance specialist advice from a broker is normally obtained. A good broker lowers the premium cost as well as providing valuable advice and support, especially on warranties and claims.

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How is the premium calculated?

The rating of an architect or any professional indemnity risk is a complex process. Underwriters need to be highly skilled and require a significant amount of information to enable them to provide a quotation which accurately reflects the risk they are pricing. Premiums are calculated based on many factors which will include:

• The firm’s fee income
• Claims history
• Qualifications and experience
• Categories of work undertaken
• Projects undertaken
• The number of partners or directors to staff ratios

To assess the risk the underwriter will require a fully completed proposal form which they will consider in detail. They will also look at the firm's website or they may even look deeper online into a firm's background.

What information is needed for an architects’ PI insurance quote?

The information required will depend on the practice and insurer, but architects will usually be asked to provide:

• A completed and up-to-date proposal form.
• Annual fee income and projected fee income.
• A breakdown of the professional services provided.
• Details of the practice’s largest projects and contract values.
• The proportion of work undertaken in different sectors.
• Details of work involving higher-risk activities, buildings or materials.
• The qualifications and experience of the practice’s principals and staff.
• Details of claims, complaints or circumstances that could result in a claim.
• The current policy limit, excess and retroactive date.
• Details of any fire-safety, cladding, basement or high-rise work.
• Information about overseas work or contracts governed by overseas law.
• Copies of the existing policy schedule and relevant endorsements.

Complete and accurate information helps the broker present the practice clearly to insurers and reduces the risk of delays or unsuitable terms. Practices must also disclose material information that could influence an insurer’s decision, even where it is not specifically requested on the proposal form.

How much cover does an architect need?

The Architects Registration Board (ARB) currently expects architects to hold a minimum limit of indemnity of £250,000 for each and every claim. However, this is a minimum expectation rather than an appropriate limit for every practice.

The level of cover required will depend on factors including the scale and nature of the work undertaken, contractual requirements, project values, previous work and the potential financial consequences of a claim. Many practices may therefore need a limit considerably higher than £250,000.

ARB’s current guidance also expects cover to be arranged on a civil liability basis, subject to the policy’s terms, conditions and permitted restrictions. Please read our latest guidance on the Limit of Indemnity.

The professional indemnity insurance market for architects

In terms of premium value, architects' professional indemnity is estimated to be worth in the region of £ 75 million of premium income to the insurance market. This is for the 'primary' insurance cover and a further £ 30 million comes from excess layer or 'top-up' cover. This is paid for by the 5,000 firms practising in the UK who generate £ 4 billion in fee revenue. The RIBA recommends that all of their members should take specialist advice on professional indemnity insurance and this recommendation is made for a very good reason.

Since 2019, the insurance market for the construction sector has been seen as 'hard' although it is now beginning a steady phase of 'softening'. In this phase we expect to see greater competition between insurers, where insurance rates premiums begin to fall.

Examples of claims against architects

Professional negligence claims against architects are surprisingly common in the modern world – it ‘goes with the territory’ when working within the construction sector. Claims can be extremely costly, even when the architect is not at fault. We’ve selected some examples of professional indemnity insurance claims we feel many architects can relate to, whether they are a small firm or larger practice.

1. Background - Architects were engaged to design and supervise the construction of an office building. Once construction was completed an issue with dampness in the property arose. The builder and the architect were both joined in the action for substantial damages by the property owner. Outcome - The architect’s professional indemnity insurer defended the action. Specialist solicitors were appointed by the insurer and a successful defence was provided. The legal defence costs were £ 300,000 and covered as part of the claim.

2. Background - The firm was engaged as Architects in a large development project. A claim was made against the Architects by the development’s Management Company. They alleged the Architects had breached their duty to exercise reasonable skill and care in the design and the construction work or to ensure that the development was reasonably fit for its intended purpose. The management company sought damages in excess of £ 2,500,000. Outcome - The insurers appointed specialist solicitors to defend the Architects. Their professional indemnity policy paid defence costs of £45,000 and the claim was settled at mediation for £ 7,500.

3. Background - Architects signed a certificate of practical completion on a residential new build project. Various snagging issues arose that went unresolved by the contractors who then blamed design faults as the cause of the problems. Outcome - The insurers paid £ 450,000 in settlement and costs.

4. Background - A claim was made against the Architect where their client was alleging the design of a building was faulty and which was causing water infiltration and foundation issues. Outcome - The claim against the Architect was successful and their professional indemnity insurers paid £ 2,500,000.

5. Background - Various problems with the construction of a new house caused construction delays and additional costs for the project. This led to a claim against the Architect who was involved in the buildings planning, design and site inspection. Outcome - Amount paid  £ 65,000.

6. Background - The Architects client had financial problems and became extremely difficult to deal with.  Changing specifications, sacking contractors and taking fanciful claims all the way to court against anyone involved. The matter was successfully defended but hundreds of thousands of pounds of irrecoverable legal costs incurred. Outcome - £ 250,000 paid in legal defence costs.

7. Background - The new floor of a warehouse disintegrated after only a few months of use. A claim was made against the architect alleging deficiencies in the design. Outcome - Insurers felt the architects defence was not sufficiently strong to risk an expensive court case and decided to settle the claim at £ 110,000.

Why is it important to read the policy?

Reading the insurance policy is an obvious necessity for any policyholder and yet it's surprising how often businesses find that they claim on an insurance policy and then discover the cover isn't as they expected because they didn't read their policy. Firms must always ensure that they have read and understand completely the terms of their professional indemnity policy. If any points are unclear, you should clarify these points with your broker.

What is a retroactive date?

Professional indemnity insurance operates on a 'claims made' basis which means that it is the policy in force when the claim is made that responds, not the policy in force at the time when the work leading to the claim was carried out (unless the two happen to be the same). The retroactive date within the policy is the date which determines how far back in time the insurer will respond to claims arising from past work. This is different from the renewal date which is the date of the policy inception or renewal, referring to the date when the insurance cover goes into effect.

In simple terms, this means if there's a period when a business allows their professional indemnity insurance to expire, any new claims arising will be uninsured regardless of when the work was carried out. It's very important that the retroactive date is carefully managed as part of the policy renewal or inception.

Do architects need run-off insurance?

Professional indemnity insurance is written on a claims-made basis. This means that a policy generally needs to be in force when a claim is made or a circumstance is notified, rather than only when the work was originally undertaken.

When an architect retires or an architectural practice closes, run-off insurance can protect against claims arising from previous work. ARB currently expects principals and directors to take reasonable steps to maintain at least six years of run-off cover, or five years for practices in Scotland, and to continue monitoring the possibility of claims after that period.

Some liabilities can last longer. For example, contracts executed as deeds may create a 12-year liability period, while claims may also arise under legislation such as the Defective Premises Act. The appropriate duration and level of run-off cover should therefore be considered with a specialist broker and, where necessary, a solicitor.

ARB’s guidance states that run-off cover should be maintained at the same level as the practice held during its final year of trading.

How to present your practice to insurers

The presentation of your business to insurers is more important than you may think. It will influence the prospective insurer's perception of your business and therefore if the information is badly represented, this could influence both their judgement and the premium you pay. Quite simply, they are considering the risks that your business may pose.

Ensure that all of your information is clear and supply this to them with any brochures your provide and details of your website. It all goes to create the best impression of your business. Read our guidance on Risk Presentation.

What architectural work is considered higher risk?

All the professional work carries some risk and for architects this can vary considerably dependent on the area you work in. The list below gives an indication of where the majority of professional indemnity claims come from in your profession:

• Low risk - town planning, feasibility studies, interior design.
• Medium Risk - architectural design
• High Risk - new build architectural work, project management, basements

Fire-safety and cladding cover

Professional indemnity insurance relating to fire safety and cladding can be subject to different limits, exclusions and restrictions from the remainder of an architect’s cover. Depending on the insurer and the practice’s work, cover may be offered on an aggregate basis, restricted to direct losses or subject to a separate excess.

ARB’s current guidance recognises that architects may find it difficult to obtain unrestricted cover for fire-safety and cladding claims. However, architects are expected to take reasonable steps to obtain the most comprehensive cover available and to review any restrictions at each renewal.

Restricted insurance cover does not reduce the architect’s potential legal liability. Practices should therefore check that their insurance is appropriate before accepting work involving fire safety, cladding or other restricted activities.

The availability of cover depends on the practice’s work, previous projects, insurer appetite and the policy’s terms, conditions and exclusions. A complete exclusion should not be accepted for architectural work that the practice intends to undertake.

Frequently asked questions

Is professional indemnity insurance compulsory for architects?

UK architects in business or practice are expected under Standard 4 of the Architects Code of Conduct and Practice to maintain adequate and appropriate professional indemnity insurance. Architects should ensure that their work is covered by their own policy, their employer’s insurance or another suitable arrangement.

What is the minimum level of cover for an architect?

ARB currently expects architects to hold at least £250,000 of cover for each and every claim. This is a minimum expectation rather than an appropriate limit for every practice. The required limit should reflect the scale and nature of the work, contractual requirements and the potential size of a claim.

Does architects’ professional indemnity insurance cover previous work?

It may cover claims arising from previous work, provided the work was undertaken after the policy’s retroactive date and the claim or circumstance is properly notified while suitable cover is in force. Cover remains subject to the policy’s terms, conditions and exclusions.

Does architects’ professional indemnity insurance cover fire-safety and cladding claims?

Cover may be available, but it is frequently subject to separate limits, an aggregate limit, higher excesses or other restrictions. The precise position depends on the architect’s work, the insurer and the policy wording.

What happens to professional indemnity insurance when an architect retires?

An architect or practice may need run-off insurance to cover claims arising from work undertaken before retirement or closure. ARB currently expects at least six years of run-off cover, or five years for practices in Scotland, with longer periods potentially required for some liabilities.

How long does it take to obtain a quotation?

The timescale depends on the complexity of the practice and whether insurers require further information. Providing a complete proposal form, claims information, project details and the existing policy documents can help prevent delays.

Why choose PIIB?

We have a wealth of experience arranging professional indemnity insurance for Architects of all types and size. We have the level of understanding necessary to represent your firm confidently in discussions and negotiations with insurers. We work hard to deliver long term insurance relationships, stability and reliability as well as value.

We are also independent and not tied to to any schemes or insurers, so you can be sure that our advice is impartial.

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This note is intended for informal guidance purposes only. Whilst all care was taken to ensure the accuracy of the guidance note at the time of writing, insurance markets constantly change and it is not to be regarded as a substitute for specific insurance or legal advice. For insurance advice please contact a broker and for legal advice contact a solicitor. This guidance note shall not be reproduced in any form without our prior permission. © Professional Indemnity Insurance Brokers Ltd