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Professional indemnity explained
A PI obligation is a promise in an appointment or collateral warranty to keep professional indemnity cover of a stated amount, basis and duration. It matters because former Wren members must now meet those promises with commercial cover.
Part of: Architects' PI insurance
In short
Most architects' appointments and collateral warranties require PI to be maintained for a period after completion, often 12 years where the document is a deed, at a stated limit and basis. Trowers and Hamlins noted that appointments often require cover on no less onerous terms for 12 years or more. Many clauses are qualified by availability at commercially reasonable rates and carve out fire safety or cladding cover. Former Wren members should list these obligations, compare them with the cover they now hold, tell clients where it falls short, and be ready to give evidence of cover.
Changing insurer is not usually a breach in itself. Most PI clauses in appointments and warranties care about the cover, not who provides it: the limit, whether it is each and every claim or aggregate, the period it must be kept for and any special terms. The question for former Wren members is whether the commercial cover they now hold matches what they promised. Construction Enquirer reported that some consultants may no longer meet the PI levels in existing appointments.
Trowers & Hamlins noted that appointments generally require professional indemnity insurance to be maintained "on no less onerous terms for 12+ years". If new exclusions or sub-limits make the cover more onerous than the cover in place when the appointment was signed, that wording may be engaged.
| Clause | What it usually says | What to check after the Wren |
|---|---|---|
| Limit and basis | A sum, each and every claim or in the aggregate | Whether your new limit and basis match, including for fire safety |
| Duration | Cover kept for a set period after practical completion, commonly 6 or 12 years | Whether you can keep it for the whole period |
| No less onerous terms | Cover no more restrictive than at the date of the appointment | New exclusions, sub-limits or defence costs changes |
| Commercially reasonable rates | The duty applies only while cover is available at reasonable rates | Whether you must notify the client if it is not |
| Fire safety carve-out | Fire safety or cladding cover may be held in the aggregate or at a lower amount | Whether the carve-out matches your new sub-limit |
| Evidence of cover | A broker letter or certificate on request | Who signs it and what it must state |
See PI to be maintained for 6 or 12 years and the commercially reasonable rates clause. The 12 year period often tracks the limitation period for claims under a deed in the Limitation Act 1980.
Many appointments already allow fire safety and cladding cover to be held in the aggregate, reflecting a market where full cover has been hard to obtain. ARB's PII guidance accepts aggregate cover for these claims where there is no alternative. Where an appointment requires each and every claim cover for all claims, a new aggregate sub-limit may fall short.
Clients, funders, tenants and purchasers relying on collateral warranties commonly ask for:
Our guide to what a PI certificate shows and what clients can ask to see explains the usual evidence. Policy wordings are often confidential, so a broker letter is the common route.
ARB's guidance says that if insurance cover for existing appointments is no longer available, architects should notify their clients without delay, and may need professional advice on their contractual obligations before deciding whether it is appropriate to remain appointed. It also asks architects to contact former clients where a change in coverage may affect them, and to write to ARB to explain any non-insurance.
Appointments may set their own notice duty, often triggered when cover stops being available at commercially reasonable rates. A short factual letter is usually enough: what cover you now hold, how it differs from the contract requirement and what you propose. It helps to agree the approach with your broker and, where the gap is significant, with a construction lawyer.
Existing obligations are only half the task. New appointments signed after the move to the commercial market should reflect the cover the practice can actually buy, so that it does not take on a breach from day one. Points commonly negotiated include:
Clients and funders have their own concerns, and Trowers said clients should seek to ensure their professional team remains appropriately insured. Explaining the market early, with evidence from your broker, tends to make these discussions easier. Where the practice is novated to a contractor on design and build, see novation and PI in design and build, because the contractor's appointment may carry its own PI terms.
Illustrative example 1: a 2021 appointment requires £10m each and every claim for 12 years, with fire safety cover permitted in the aggregate. The practice now holds £10m each and every claim with a £5m fire safety aggregate. The terms broadly fit, and the practice confirms this in a broker letter when the funder asks.
Illustrative example 2: a collateral warranty requires cover on no less onerous terms than at the date of the warranty, with no fire safety carve-out. The new policy has a cladding exclusion. The practice notifies the beneficiary, takes advice on the clause, and asks the market whether a project carve-back is available.
For the wider picture, read our guide for former Wren members, fire safety and cladding cover after the Wren and architects PI insurance guide.
Apex arranges architects' PI and can check appointment insurance clauses against your cover; a broker reads every enquiry.
Usually not in itself. Most clauses require cover of a stated amount, basis and duration rather than cover from a particular insurer. A problem arises if the new cover is lower, more restricted or excludes something the appointment requires, especially where the clause says no less onerous terms.
It usually means the cover you keep must be no more restrictive than the cover in place when the appointment or warranty was signed. New exclusions, sub-limits or a change to defence costs could make cover more onerous, so check the exact wording and take advice where the gap matters.
Check the appointment first, as many set a notice duty. ARB's guidance says that where cover for existing appointments is no longer available, architects should notify their clients without delay and may need professional advice on their contractual obligations.
Most appointments let the client ask for reasonable evidence that the required cover is in place, usually a broker letter or certificate confirming the limit, basis, period and any fire safety terms. Policy wordings are often confidential, so full wordings are not normally provided.
Send us your current schedule and wording, your last Wren policy documents and your project list. We will check continuity for claims on past projects, fire safety terms and your contract obligations ahead of your first open-market renewal. No fee and no obligation. Or call 0117 325 0027.
Book a PI programme review Get a quoteApex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information, not advice on your individual circumstances, and it does not guarantee that cover will be available or on what terms.
