Why engineering firms must verify sub-consultants’ PI coverage
Several cases have emerged in recent months where sub-consultants held only minimal Professional Indemnity (PI) Insurance, or none at all. Too often, firms discover these gaps after a claim arises, and by then, it’s too late. When a sub-consultant collapses, their liabilities don’t vanish; however, the lead engineering firm’s ability to subrogate does. To prevent this, firms need to check PI levels regularly and insist on “back-to-back” cover that mirrors their own obligations and, in many cases, go further to ask about the sub-consultants’ liquidity. Without this discipline, the financial burden of errors or omissions can fall entirely on the main contractor, turning a manageable risk into a costly problem.
The critical issues impacting PI Insurance for engineering firms
Engineering firms are operating in a risk environment that grows more complex with each passing year. PI Insurance, once regarded as a straightforward safeguard, has become increasingly difficult to navigate due to exclusions and mounting regulatory demands. Staying ahead of these developments is essential. The sections below outline some of the most pressing challenges engineers face in securing and maintaining effective PI protection.
The growing impact of policy exclusions
Although the market is softening, cladding and fire safety are still headline concerns in the wake of high‑profile building failures. Insurers are responding by restricting cover for claims in these areas, leaving engineers potentially exposed to significant liability.
How evolving safety standards impact PI insurance for engineers
The regulatory standards have tightened significantly, particularly in the aftermath of events such as the Grenfell Tower fire. Engineers now face heightened scrutiny to ensure that designs and installations comply not only with the letter of the law but also with the evolving spirit of safety regulation. Falling behind on new standards in areas such as fire safety, environmental compliance, or materials specification can expose firms to claims, even when clear negligence is absent. Compliance has become a moving target, and insurers are increasingly cautious about covering risks linked to regulatory change.
The financial impact of design errors and omissions on engineering firms
Even with careful discipline, mistakes are unavoidable. Miscalculations, omissions, inadequate surveys, faulty specifications, or incorrect assumptions can all result in expensive remedial work, litigation, or compensation claims. Delays and cost overruns are another common source of disputes. When a design error causes a project to stall or adds unexpected costs, clients often look to recover losses through PI claims. The financial and reputational consequences of these disputes can be serious, particularly where insurance cover is limited or contested.
Managing retroactive risk and long-tail exposure
Structural or material defects can remain undetected for many years after a project is completed. This long‑tail liability makes it essential for engineers to secure policies with suitable retroactive dates to guard against claims that arise well after the work is finished. Without such policies, firms risk being exposed to liabilities that surface long after the active life of their projects has ended.
Working with engineers to secure the right cover
The challenges outlined above underscore the importance of proactive risk management and careful scrutiny of PI coverage. At Clear, we specialise in supporting structural and civil engineers, while also working extensively with fire engineers. We understand the unique exposures these disciplines face and the critical importance of tailored PI coverage.
Through our access to the London and Lloyd’s marketplace, we can place risks in the open market or with a panel of insurers offering broad wordings and robust policy structures. Our team of highly experienced brokers is on hand to provide their specialist knowledge and support to smaller firms and the more challenging businesses. This approach helps ensure engineers benefit not only from solid advice but also the comfort of knowing that the coverage is both comprehensive and resilient in the face of evolving challenges.
