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“Shameful” removal of fire safety from PI insurance leaves building owners uninsured

10 December 2020

CONSTRUCTION EXPERTS have raised concerns over fire safety issues being increasingly excluded from professional indemnity (PI) insurance policies following the Grenfell Tower Inquiry, thereby leaving the owners of buildings such as schools, hospitals and general businesses at risk of being uninsured.

Property and construction consultancy Ingleton Wood LLP has now launched a campaign designed to tackle what the company references as “shameful” so-called ‘fire carve-outs’ or policy exemptions which the firm states are becoming increasingly common in the PI market.

Ingleton Wood is calling on the Government to take urgent action such as underwriting the policies to ensure that all consultancies are comprehensively insured, including for fire-related inspection and design services.

In essence, consultants and professionals in the construction industry take out PI insurance to cover the cost of negligence claims that clients could make against them if an incident – such as a building fire – was caused by an error in design or a failure in specification.

The pressure realised by the Grenfell Tower Inquiry has caused many underwriters to leave the PI insurance market due to higher risks, such as those centred on cladding. As a direct result of this, insurers are hiking up their premiums or otherwise reducing the amount of cover they’re actively prepared to provide.

The aforementioned ‘fire carve-outs’ are a growing example of reduced cover. According to reports, PI policy proposals are increasingly stating that the underwriter will not pay out for any negligence claims connected to the fire safety or fire performance of a building, either retrospectively or in the future.

Fire safety exclusions

David Cresswell, partner at Ingleton Wood, explained to Fire Safety Matters: “We’re very concerned about the rising prevalence of fire safety exclusions in professional indemnity policies. ‘Fire carve-outs’ are shameful documents and essentially mean that consultants would be uninsured for any passive or active fire issues. As we understand it, many other consultants are taking reduced cover as they simply cannot afford the full cover. This is a hugely damaging position for the industry and will no doubt have wider ramifications for building owners and occupiers.”

Cresswell continued: “The built environment relies on competent consultants to apply the regulations in order to safeguard us all. It’s therefore time for the Government to step in with greater regulation or, even better, underwrite the insurance itself. We’re also lobbying local MPs, industry regulators and other stakeholders to help tackle this very serious issue.”

The Royal Institute of British Architects has already acknowledged the truism that PI cover is “becoming more and more challenging” and has pledged to help the industry tackle the issue.

Ingleton Wood is one of the largest property and construction consultancies covering central England, East Anglia, London and the South East, with offices in London, Colchester, Norwich, Cambridge, Billericay and Oxford. Its services include architecture, building surveying, building services engineering, planning, interior design, civil and structural engineering, quantity surveying, project management and Health and Safety.