How can architects decide on the right level of insurance for their practices?

Getting the correct level of professional indemnity insurance for your architect’s practice can be a minefield.

No one wants to overspend, but if you get it wrong your practice could go under.

The rules

Every registered architect must have an adequate level of professional indemnity insurance.

The Architects Registration Board specifies that this insurance must be an at ‘adequate and appropriate’ level, even for those who are employed by their practice or those working as a consultant on projects. (See frequently-asked questions about the board’s code ( here.)

So, what does ‘adequate and appropriate’ mean?

The board says every architect should have a minimum indemnity of £250,000.

However, that may well not be adequate for your practice. Deciding on your level of cover depends on the scale and type of projects you undertake.

Often, there can be substantial risk even with smaller projects or for practices with a small income.

The board cites one case where an architect with a fee income of under £10,000 took on a £30,000 project and had £100,000 worth of coverage.

That practice faced a potential claim of £159,000 from that £30,000 project – and realised far too late that the level of cover was inadequate.

Even if your clients agree to a ceiling level in the event of a problem, other third parties like utility companies, landowners, or the owners of nearby buildings won’t be covered by that agreement.

You need to get your cover right to ensure your family’s future, the future of your practice, to bid for certain contracts, and to make your business credible to potential clients.

What’s the way forward?

There’s no one-size-fits-all answer to this question.

The best way forward is to discuss your practice fully with your insurance broker.

At Severn Bay, we spend time getting to know our clients’ businesses for one very good reason – the more we know, the better we can advise you on the correct level of cover for your practice.

We’ll need to know as much as we can about the projects you’re involved with now, what you’ve done in the past, and what you’re looking to bid for in the future.

Do you need to review your cover? Will you need to increase your current indemnity level for future projects?

Are you planning to retire and do you need ‘run off’ cover?

It’s worth spending the time with our experts now to avoid a huge problem in the future.

Find out more about our cover here.