architect/technician what way forward for the industry?

[Shytalkz]

You would take out what is called run-off cover. If you don't have insurance at the time of the claim, you are not covered.

PII runs from policy start date, unless you specifically request retroactive cover for previous work.

Previous cases mean your liability period is pretty much unlimited and can be up to 12 years after you shuffle off this mortal coil.

 

[peca27]

As an example:

If I were take out this 'PI run-off' cover from 2010 + pay the policy for 5 yrs till 2015, then if I were to stop paying......what happens if a client makes a claim in 2017 against a design I put together when I was covered in 2012?

I'm basically trying to identify if I were to take out PI Insurance, would I have to pay the policy for the rest of my life for it to be valid.....or could I pay for it just the next 10 yrs or so? Then even if a client makes a claim 15/20 yrs down the line I'm still protected/or ortherwise.

 

[Shytalkz]

PII works from a date that you set when you take out the policy. If the jobs you want covered pre-date when you take out the policy, then you take out what is called retroactive cover (for more cost, obv) eg you take out a policy now, but want cover for all your work back to 2005, then you take out retroactive cover that will effectively start from 2005.

Every year that you continue paying premiums, you are covered from 2005, to the end of that policy year.

When you stop paying the premium, you are not covered. At all. For anything, anytime.

However, if you take out run-off cover, then all your jobs from the start date to the date of that policy is covered for up to 12 years after your death. Run-off cover is provided when you make a one-off payment, generally equivalent to 2 or 3 years premiums. There will be no more to pay thereafter.

What would not be covered would be any new work that you then undertook, which would have to be under a new policy.

PII only covers you up to the limit of that policy, including legal fees, which more often than not will be substantially greater than for the cost of the works being argued about. Once the costs go over that policy limit, you're on your own. Which is why most people these days work under the banner of an LLP or limited company.

 

[peca27]

Looks like a need a lesson on 'how to run a business'.......

In summary - when I'm doing private jobs I should be operating with the following conditions?

- Operate under a Ltd liabiblty partnership OR as a Ltd Company. Thereby protecting myself if a claim became too excessive for my PI to cover, any idea on costs for setting this up?
- Have 'run-off' cover, which is SEPERATE to standard PI cover, which covers me for any + all jobs from the policy start date until 12 yrs after my death. The cost of this is a one-off payment approx 2/3 times a standard annual policy rate?
- Take out annual PI Insurance. I am not concerned about cover for jobs I have done previously, I am only interested in cover for subsequent works. So why wouldn't the 'run-off' cover protect me here? Or do I need to take out BOTH 'run-off' + standard PI?

I remember making a few investigations 6/12 mths ago + got PI quotations of £500k cover @ approx £300 per yr I think......does that sound reasonable?

 

[Shytalkz]

Nearly there but you would only take out run-off at the point you give up doing that kind of work. It does not cover you for new jobs, so if you picked up the cudgel again, you could either:

keep the run-off cover, take out new PII (and then take out an additional runoff policy when you packed it in second time around);

take out a new PII policy with retrospective cover for all the old jobs, negating the run-off policy - but you won't get any premium rebate.

If you're not concerned about old jobs, then take out PII with no retroactive cover: policy cover starts from date of inception and no earlier. You can't get run-off cover for stuff that was never covered by PII in the first place.

Sounds slightly cheap for £500k cover. Check what policy excess is too.