BOA: INSURANCE

For the sake of simplicity this article refers generically to all architectural design professionals as architects. This is by no means intended to discredit either Registered Architects or Building Designers, and their similarities or unique differences as practicing professionals. 

 

Insurance and liability

The responsibility (and liability) of an architect’s role requires them to carry insurance that protects the livelihood of the architect and provides compensation to clients, contractors, consultants, or even the general public if things go wrong. Companies usually take out insurance to cover the whole works that is produced, associated activities in public spaces and the protection of employees.

The liability limit is commonly based on the size and scale or the projects undertaken. As long as the architect fulfils their requirements set out by the insurer, the insurer is obligated to provide financial cover for legal costs and damage claims for the architect’s professional services.

 Insurance policies that Architects are required to hold are as follows:

  • Professional Indemnity
  • Public Liability

Other types of associated insurances that dependant on the employment situation of the architect, may be required to hold:

  • Products liability
  • Workers Compensation 

Insurers also provide other ‘add-ons’ to policies that you will need to decipher the Product Disclosure Statement (PDS) and make sure whether they are applicable to you or whether they are essential/beneficial for the services you provide.  

 

Professional Indemnity

The architect can be held liable (financially responsible) if someone suffers personal injury or financial damage due to the architect’s failure to perform their contracted role. An architect is required to design in accordance with national, state, and local legislation. Professional Indemnity Insurance is mandatory for registered architects, and highly recommended for anyone performing architectural services as it provides protection against legal costs or claims for damages to third parties that may arise from an act, omission or breach of duty in the course of their work.

If you work for a large company (or partnership structure) then the policy, they have active will cover your work as an employee. Company Directors/Partners/ Sole practitioners are ultimately responsible all works and usually sign off on the final product. Therefore, it is also recommended that individual Directors be listed on the policy, in addition to the company name. This policy can also be helpful if there are situations where services are provided externally to the usual business provisions of the company, although you must ensure that all potential services that you provide is covered under the policy.

Upon application, generally, you are required to provide the following information, which may differ from company to company:

  • General business information, staffing and business income
  • List of names to be covered under the policy
  • Policy liability amounts and information
  • Geographical location of services and the percentage breakup of total services to location
  • Types of services that will be provided and the percentage break up of total services
  • Other questions or questionnaires about products such as asbestos and external cladding use, construction site related questions, sub-contractors
  • Stamp duty exemption for small business (if applicable)  

Public Liability

Essential for any company who engages with the public, which is anyone. It protects professionals against claims that may arise to due to property damage or personal injury that is sustained to a third party, member of the public, as a result of your business operations.

This insurance is usually coupled with professional indemnity insurance and will increase the premium, however it is invaluable for an office holder where members of the public attend/pass by or when involved in a construction site where public liability cover is mandatory. As there is a substantial level of risk damage to property, risk of injury or even death to members of the public if something goes wrong on a construction site (just think of a crane) it is imperative that an architect has this type of cover and is not relying on the contractor to be the only one implicated in the claim.  

Products Liability

If you sell or supply any products, in addition to your services as an architect, you will require (or is recommended) to undertake Product Liability Insurance.  

For example – custom tapware or furniture that has been designed, fabricated and sold, either bespoke for one project or mass production.

Product liability insurance will protect you against claims that may arise from the product’s use either property damage or personal injury. Depending on the policy, you will be insured for the legal fees and associated court costs and/or the claim amount.

Workers Compensation

Workers Compensation insurance is to protect employers from the costs of workers compensation claims. In the case of work-related injury of an employee, the workers compensation system helps employers to support their employee’s rehabilitation until they can return to work at their full capacity. This support includes weekly costs benefits, medical and hospital expenses, income protection during time-off work, and promotes adjusting employees role during their recovery. It also covers instances such as permanent inability to return to work or death. Therefore, insurance coverage is vital to ensure that the personal protection of all staff is insured, even the boss.

Workers compensation covers employees if injury or damages is sustained during business activities, including travel to and from places of work. As architects are not only bound to an office desk, there is travel to and from the office and other meeting locations with clients and project sites. In addition, the extent of travel could be local, regional, interstate or even international, therefore it is important to check your policy to the conditions of travel extends to. For example, interstate or international travel for less than 6 months duration. 

The legislation that pertains to workers compensation is the jurisdiction of each state and territory in Australia. Therefore, this information and requirements may differ dependent on which state you are practicing in.

In NSW, it is mandatory for employers to hold Workers Compensation insurance with only few exemptions. The key legislation to refer to are:

Workplace Injury Management and Workers Compensation Act 1998 No 86

Work Health and Safety Act 2011 No 10 (for more information on WHS)

This information has been given as a brief overview and we do not claim to have expertise in this area. For more information, please visit your appropriate regulatory body website. The governing regulatory bodies of workers compensation in Australia are as follows:

 ACT: Access Canberra

NSW: SIRA

QLD: https://www.worksafe.qld.gov.au

NT: https://worksafe.nt.gov.au/

SA: https://www.safework.sa.gov.au/about-us

TAS: https://worksafe.tas.gov.au/home

VIC: https://www.worksafe.vic.gov.au

WA: https://www.workcover.wa.gov.au

 

 Always read all Product Disclosure Statements (PDS) when deciding on what insurance companies to invest the security of your business to. 

 * * *
The information contained in the article and website are general in nature and are the opinions of the author, through his professional experience and study. This should not be substituted for seeking professional or legal advice in this area. Click here for more details of our content.