Picking the right architects’ insurance can ensure your business is as stable as the homes, schools and other buildings your business designs. That’s because, like many other industries, the architecture business is full of potential risks and hazards.
It could be the use of unsuitable materials, failure to stay within your client’s budget, or even a planning error that leads to a dangerous defect in a building’s construction.
Each of these scenarios could potentially see you accused of negligence or breach of your duty of care to the client. That’s why it is sensible to protect yourself by with a solidly constructed architect insurance policy.
Here, we explain how you can design a watertight architect insurance policy, what you will and won’t be covered for, and how much it might cost.
What is architects’ professional indemnity insurance?
As an architect, professional indemnity (PI) insurance can help protect you from allegations of negligence, breach of duty of care, errors and omissions.
This could be mistakes in your initial drawings, failing to obtain the necessary planning permission, hiring negligent subcontractors, or failing to anticipate an issue that later results in a redesign or rebuild.
Basically, if you do anything that delays a project or causes your client to experience personal or financial loss, architects’ professional indemnity insurance could cover your legal costs and contribute to any resulting compensation payouts.
The Architects Registration Board recommends that architects have at least £250,000 worth of insurance per claim for professional indemnity insurance.
It points out that work carried out for free could still result in a claim being made against an architect, so you’ll need to make sure that any pro bono work you carry out is covered too.
You may also look to consider taking out at least six years of ‘run-off cover’ after you stop trading. This will help protect you from claims made against any work that you’ve already finished. The reason for this is that a client can sue you for negligence or breach of contract up to six years after the completion of a project.
What else can architect insurance include?
If you have employees, you are legally required to have employers’ liability insurance. This will protect you if a member of staff falls ill, is injured, is killed, or their property is lost, stolen or damaged while working for your business.
If you fail to take out employers’ liability insurance despite having employees, you can be fined as much as £2,500 for every day you lack the required coverage. The only exception to this legal requirement is if your staff are family members or based abroad.
As your work will involve meeting clients, public liability insurance could provide cover if a third party is injured or their property is lost or damaged because of your business activities. For example, a client could slip on a recently mopped floor in your office, or you could knock over a priceless vase while taking measurements at a client’s house.
If you run your business from an office, you may consider taking out buildings insurance, which will pay for repairs and rebuilds if your premises are damaged. Another type of insurance to potentially consider is business and office equipment insurance, which could cover any general operational equipment against loss, theft or damage both when in storage and out and about.
For more specialist equipment, such as your drawing, modelling, and measuring tools, you may consider looking at tools insurance.
Finally, it may be worth considering taking out personal accident cover. This can cover lost income and medical costs if an injury prevents you from working for any length of time.
» MORE: What is Business Liability Insurance?
Do I need architect insurance?
Yes. The Architects Registration Board’s (ARB) code of practice says that architects must have adequate and appropriate insurance and recommends a minimum limit of £250,000 for each and every claim.
» MORE: Do I Need Business Insurance?
What does architect insurance cover?
Architect insurance packages will usually include cover against claims of professional negligence, errors, and omissions, as well as injury or property damage to third parties and any employees, and loss, theft, or damage to personal equipment and business premises.
It usually includes:
- professional indemnity insurance
- public liability insurance
- employers’ liability insurance
- Legal expenses insurance
- business and office equipment insurance
- tools insurance
- personal accident insurance
Whether you need all of these covers will depend on your specific circumstances. You should be able to tailor your insurance policy to match your exact requirements.
What isn’t usually covered by architect insurance?
Architect insurance packages don’t often include cover for your business vehicle as standard.
However, if you or your employees use a car to drive to clients’ houses or site visits, covering your vehicles against damage or theft with Class 1 Business Car insurance might be a good idea. This covers you for social, domestic and pleasure use, as well as driving to and from work or between sites.
How much does architect insurance cost?
You should expect professional indemnity insurance to cost between 0.5% and 3% of your fee income. However, every architect has different needs and circumstances, so it’s impossible to say exactly how much your insurance will cost.
As a simple rule of thumb, the higher the risk you take on, the higher your maximum cover limits and the more you’ll pay for your monthly premium. For example, town planning and interior design could be considered low risk, while new-build architectural work and project management could fall into the high-risk category.
Your insurer will also take into account your claims history, the size of your business and its income, your qualifications and experience, and the number of partners or directors to staff ratios. Newer firms might enjoy lower premiums, as there is history of past work to be insured.
Architect Insurance FAQs
In order to be registered with the Architects Registration Board, it is mandatory to have professional indemnity insurance. It recommends a minimum of £250,000 in professional indemnity insurance for each and every claim.
» COMPARE: Professional indemnity insurance
An architect may consider professional indemnity, public liability, and employers’ liability insurance (if you have any staff), as well as business premises, office equipment, and tools insurance to cover your valuables against loss, theft, or damage.
Of course, whether you require all of these policies or more depends on your business requirements.
You should expect your architects’ professional indemnity (PI) insurance to cost between 0.5% and 3% of your fee income, though it could be lower or lower than this depending on your circumstances.
To be registered with the Architects Registration Board, you will need to be able to provide proof of professional indemnity insurance. The ARB recommends a minimum cover of £250,000.
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