This Practice Note looks at Professional indemnity (PI) insurance in the context of construction projects—the requirement to hold insurance, the level and basis of cover and typical wording contained in clauses requiring PI insurance to be maintained. For a wider review of Professional indemnity insurance, see Practice Note: Professional indemnity insurance—essentials.

This Practice Note refers to a consultant’s obligations to maintain PI insurance, however main contractors and sub-contractors taking on design responsibility will also be required to maintain PI insurance and the principles referred to below also apply to those contractors.

A contractor with no design responsibility may not consider it necessary to hold PI insurance, however, in the event that a contractor failed to follow the consultant’s designs, an employer may allege that the contractor made an ‘on-the-spot design decision’, which could trigger a PI policy. For more information, see Practice Note: Design liability in construction contracts—Responsibility for design under different procurement routes (in particular, the section titled ‘Traditional’).