Principal Contractor - PI exposure under the BSA

Spoke 4 of the Apex Insurance Brokers Building Safety Act 2022 hub. The Principal Contractor regime mirrors the Principal Designer regime — but the contractor's risk profile, and the policies that respond to it, are fundamentally different.

Plain English summary

Every project subject to the Building Regulations in England since 1 October 2023 has needed a statutory Principal Contractor as well as a Principal Designer. The duties are set out in Part 2A of the Building Regulations 2010, inserted by SI 2023/911.

The Principal Contractor is responsible for planning, managing, monitoring and coordinating the construction phase for compliance with the Building Regulations. On HRB projects, the Principal Contractor signs the Gateway 2 application alongside the Principal Designer, signs the Gateway 3 completion certificate, and is responsible for maintaining the golden thread of construction information through the build phase.

Once the building is occupied, Part 4 BSA 2022 kicks in. Sections 71–75 create the Accountable Person regime. An Accountable Person is, broadly, the person who owns or has repairing obligations for the common parts of the building or any part of it. They must register the building with the BSR, prepare a safety case, and discharge ongoing safety duties.

For a design-and-build ("D&C") contractor, the legal and insurance picture is more complex than for a pure contractor or a pure consultant. The D&C contractor wears two hats — designer (often as Principal Designer or as the entity to whom design responsibility is novated) and builder (almost invariably as Principal Contractor). They sit between consultant PI cover and construction PL cover, and the boundary between them is where most disputes happen.

The legal position

Principal Contractor duties under Part 2A

The Principal Contractor's duties under the inserted Part 2A of the Building Regulations 2010 (SI 2023/911) include:

Plan, manage and monitor the construction phase.
Coordinate matters relating to the construction phase to ensure that, so far as is reasonably practicable, the construction work complies with the Building Regulations.
Cooperate with the Client, the Principal Designer and any other person on the project on matters relating to compliance.
Liaise with the Principal Designer on design work done during the construction phase.
Provide information to the Client to enable them to discharge their own duties.

Part 2A also imposes parallel duties on contractors more generally — every contractor must ensure that the work they carry out complies with the Building Regulations.

On HRB projects, the Principal Contractor also:

Signs the competence declaration submitted at Gateway 2.
Manages change control through the construction phase under the change control plan.
Maintains the golden thread of construction information.
Submits the Gateway 3 completion certificate application.

Competence — PAS 8672:2022

The competence framework for Principal Contractors is set out in PAS 8672:2022 (Built environment — Framework for competence of individual Principal Contractors — Specification). It mirrors PAS 8671:2022 (Principal Designers) in structure. The SKEB requirement is again proportionate to the project — a small extension is not the same competence ask as a 30-storey tower.

Civil liability routes

The Principal Contractor on a dwelling project is squarely within section 1 DPA 1972 — a person "taking on work for or in connection with the provision of a dwelling". Limitation as for any other person under section 1: 30 years retrospectively, 15 years prospectively (see Spoke 1).

Section 38 Building Act 1984 applies. Tort of negligence applies. Contractual liability under the building contract applies. Breach of duty under the Construction (Design and Management) Regulations 2015 applies. The Principal Contractor sits at the bottom of a deep stack of potential causes of action.

Criminal liability

The same section 35 Building Act 1984 / section 39 BSA 2022 regime that catches the Principal Designer also catches the Principal Contractor. Maximum penalties were increased by section 39 BSA 2022, with imprisonment available for the most serious HRB offences. The "competent person" defence under section 35A applies.

The Accountable Person regime under Part 4

Sections 71–75 BSA 2022 establish the Accountable Person regime for occupied HRBs. Section 72 defines an Accountable Person as a person who:

Holds a legal estate in possession in any part of the common parts of the building, or
Owes (under a lease or otherwise) an obligation to repair or maintain any of the common parts.

Where there is more than one Accountable Person, section 73 designates one of them as the Principal Accountable Person — typically the entity with the broadest repairing obligations.

The Accountable Person must:

Register the building with the BSR (section 78).
Apply for a building assessment certificate (section 79).
Prepare and maintain a safety case report (section 85) and provide it to the BSR on request.
Assess and manage building safety risks throughout occupation (the duty under section 84).
Cooperate with the BSR.
Take "all reasonable steps" to prevent the spread of fire and structural failure (the building safety risks under section 62).

Failure to discharge these duties attracts criminal liability under section 74 and following. The maximum penalties are again significant.

Where the D&C contractor fits in Part 4

A pure D&C contractor that builds and hands over typically does not become an Accountable Person — the freeholder or management company does. However, in build-to-rent or build-to-hold models, the contractor's wider group may take on a Part 4 role, and the analysis has to follow the corporate structure. A contractor that retains a long-term repairing obligation under a long-stop warranty arrangement may also find itself with Accountable Person duties at the margin.

The "as-built" representation

The Gateway 3 completion certificate is, in effect, a representation by the Principal Contractor (and Principal Designer) that the building has been constructed in accordance with the approved design and complies with the Building Regulations. A later finding that the building does not comply puts that representation in issue, and is potentially a basis for both regulatory action and civil contribution claims.

The PI implications

Two policies, one risk

A D&C contractor needs both PI (for design responsibility and professional services) and a construction-sector public liability / contractors' all-risks programme (for the physical work). The boundary between them is the source of most coverage disputes.

A failure of design — say, an inadequate fire-stopping detail at a slab edge that allows fire to spread between flats — is a PI claim. A failure of workmanship — installing the right detail in the wrong way — is a public liability claim, or a contract claim, depending on the wording. The same factual matter may give rise to allegations of both, and the two insurers may dispute which policy responds.

The BSA 2022 era has made these disputes more frequent and more financially significant. The fire-related sub-limit on the PI side and the cladding exclusion on the PL side together can leave material gaps in the contractor's overall protection.

PI proposal-form disclosure

Modern contractor PI proposal forms (and many combined wordings) ask about:

Total residential turnover by year, broken down by over/under 11m.
HRB projects: number, scale, role (Principal Contractor / sub-contractor / other).
Any Gateway 2 rejection history.
Any in-house fire engineering or cladding design capability.
EWS1 sign-off work.
Any pending or threatened section 1 DPA / RCO / Remediation Order matters.

Omissions trigger fair-presentation issues under section 3 of the Insurance Act 2015. See Spoke 7.

Sub-limits and aggregation

The HRB sub-limit on the PI side typically applies regardless of whether the contractor is Principal Contractor, sub-contractor or simply a participant in the supply chain. Aggregation — whether a single causative defect across multiple plots aggregates to one claim — is decided by the wording's series clause.

Run-off

A contractor that closes a corporate vehicle (a project-specific SPV, for example) leaves a tail of latent liability behind. The 30-year DPA window means historic SPV liabilities are reachable by claimants for far longer than was once the case. The standard answer — extended run-off on the PI policy — is more difficult to come by and more expensive. See Spoke 8.

Public liability — a separate analysis

The post-Grenfell market response on contractor public liability has been less dramatic than on PI, but it is not absent. Many PL wordings now include their own fire/cladding wording adjustments and may exclude liability arising from cladding remediation work or HRB project-related work. Read both sides of the programme.

D&O and personal liability

The director or senior manager of a contractor who signs the Gateway 2 competence declaration or the Gateway 3 completion certificate is making a personal representation. The criminal-liability provisions can attach to natural persons. D&O cover is now essential alongside the corporate's PI and PL.

Worked scenario

Facts: A national D&C contractor (turnover £180m, residential approximately 35%, PI limit £25m on each-and-every basis with a £5m HRB sub-limit and £3m fire safety sub-limit, both costs inclusive; PL programme separate; D&O programme in place) builds an 11-storey block of 88 flats. Design responsibility was novated from the developer's consultants on appointment. The contractor signs Gateway 2 and Gateway 3 as Principal Contractor.

Two years after occupation, a small fire breaks out in a fourth-floor flat. The fire spreads more rapidly than the fire strategy assumed because of a defect in the compartmentation detailing at the bedroom door head. Three flats are damaged. There are no fatalities. The freeholder commissions an investigation; the investigation identifies that the same compartmentation defect is replicated across all 88 flats.

The freeholder serves a section 1 DPA 1972 claim on the contractor and intimates a Remediation Order application. The contractor notifies its PI insurer.

Issues:

The defect is in design execution but arguably in design responsibility — the novated design did not detail the head condition correctly, and the contractor's design manager did not catch it.
The fire-related sub-limit (£3m, costs inclusive) is the binding limit on the PI policy.
The PL policy covers third-party property damage but excludes cladding-related work and may exclude losses arising from "defective workmanship" depending on the wording.
The freeholder's loss across all 88 flats is estimated at £14m.
The contractor's appointment imposes an obligation to deliver the building free of defects; the contractor's parent company guarantee is in place; the building contract includes a limitation of liability of 200% of the contract sum but excludes that cap for breach of statutory duty.

Likely outcome (illustrative):

The PI insurer responds within the £3m fire-related sub-limit. Defence costs erode rapidly.
The contractor seeks contribution from the novated designers; their insurers respond subject to their own fire safety sub-limits.
The contractor's PL insurer disputes coverage for the rectification cost of the compartmentation defect itself (defective workmanship) but indemnifies the third-party property damage to the three damaged flats.
The remediation cost across the remaining flats is funded out of the contractor's own balance sheet, with the parent-company guarantee in play.
The shortfall is in the seven figures. The contractor's renewal is exceptionally expensive.

The point: the D&C contractor sits in the middle. Their risk programme has to be designed as an integrated whole — PI, PL, D&O, building contract, parent guarantee, and contractual sub-contractor flow-down — or gaps emerge precisely where the BSA 2022 wave hits.

Sector-specific practical takeaways

Tier-1 main contractors: the dutyholder regime is now BAU but it still warrants explicit governance. A documented BSA 2022 compliance framework — Principal Contractor competence assessments, change-control routines, golden-thread workflow, regulatory engagement protocols — is now expected by insurers, by clients and by the BSR.

Mid-market contractors: the HRB market is consolidating. Mid-market contractors with limited HRB-specific capability are increasingly being squeezed out of the role. Be candid about the SKEB you can credibly bring; declining an inappropriate Principal Contractor appointment is the right risk decision.

Subcontractors: even where you are not the Principal Contractor, you are a "contractor" under Part 2A with your own statutory duty. Section 1 DPA 1972 reaches you directly. Be sure your PI / PL programme is fit for purpose and that your sub-contract flow-down does not leave you with unbacked liability.

Specialist installers (cladding / EWS / fire stopping): these are the highest-risk specialist trades in the new regime. PI / PL availability is constrained. Document your competence; document your installation QA; document the materials specification you were instructed to use; document who approved deviations.

Build-to-rent and build-to-hold contractors: consider whether your corporate structure makes you an Accountable Person in occupation. If yes, the Part 4 duties are an additional layer requiring its own governance, its own insurance treatment, and its own risk-budget.

Frequently asked questions

1. Can a sub-contractor be the Principal Contractor? The Principal Contractor is appointed by the Client. In practice it is almost always the main contractor; a sub-contractor cannot unilaterally take on the role. The sub-contractor still has the Part 2A contractor duties.

2. We are a D&C contractor with novated design. Are we Principal Designer as well as Principal Contractor? Possibly. Novation of design does not automatically make you Principal Designer; that role requires a separate appointment from the Client. In some procurement structures the design responsibility is novated but the Principal Designer role is retained by the lead consultant — read the appointment chain carefully.

3. Does the Building Regulations Principal Contractor regime replace the CDM 2015 Principal Contractor? No. Both regimes apply in parallel. The CDM 2015 role addresses construction health and safety; the Part 2A role addresses Building Regulations compliance. Different duties, different breaches, often the same person.

4. What is the "all reasonable steps" defence? Section 35A of the Building Act 1984 provides a defence to a section 35 prosecution if the defendant proves they took all reasonable steps and exercised all due diligence. A documented competence framework, change-control records, supplier verification and supervision records are the building blocks.

5. Are we an Accountable Person if we contract under a JCT D&B and hand over at PC? Almost certainly not. The Accountable Person role attaches to ownership of, or repairing obligations in respect of, the common parts. A D&B contractor who hands over at PC and walks away does not have such an obligation. Long-stop warranties and defect periods do not normally make you an Accountable Person, but very long warranty terms or "design-build-operate" structures can blur the line.

6. We were the Principal Contractor on a building that has now been found unsafe. The freeholder is going to apply for a Remediation Contribution Order. What do we do? Notify your PI insurer immediately as a circumstance. Engage specialist counsel. Gather your project records (design submissions, change-control, supplier records, completion documents). The RCO process is litigated in the First-tier Tribunal — speed matters.

7. We are a contractor that closed a project SPV after PC. Can we be reached? Possibly, depending on the corporate structure and the BSA 2022 "associate" provisions (section 121 BSA 2022). The RCO regime explicitly extends to "associates" of the developer / freeholder, and the courts have been willing to look through corporate structures. Specialist advice is essential.

8. Does the dutyholder regime apply to a building shell where the developer retains the fit-out scope? The dutyholder regime applies to all relevant works. Where the works are split, careful sequencing of dutyholder appointments is needed. Don't assume the role transfers automatically when scope changes hands.

9. Is the Principal Contractor liable for the design choices of the Principal Designer? No, not directly. The Principal Contractor is liable for execution and for cooperation on compliance. If the design is non-compliant and the Principal Contractor knew or ought to have known, the position is different — Part 2A creates a coordination duty, and ignoring an obvious non-compliance can found a breach.

10. What is the interaction between a parent company guarantee and our PI cover? The PCG is a contractual undertaking by the parent to perform if the subsidiary does not. It is not insurance and it is not affected by PI cover. The PI may respond to the underlying liability; the PCG sits on top, calling the parent into the loss if the subsidiary cannot pay. The two should be priced together when assessing total risk capital.

Sources

Statute — Building Safety Act 2022 c.30, ss.39, 71–75, 121, 124; Building Act 1984 c.55, ss.35, 35A, 38; Defective Premises Act 1972 c.35, s.1.

Secondary legislation — Building Regulations etc. (Amendment) (England) Regulations 2023 SI 2023/911 (inserting Part 2A into the Building Regulations 2010); Construction (Design and Management) Regulations 2015 SI 2015/51.

Standards — PAS 8672:2022 (Built environment — Framework for competence of individual Principal Contractors).

Guidance — Building Safety Regulator dutyholder guidance for Principal Contractors; HSE guidance on Part 4 Accountable Persons.

Where this fits

Disclaimer

This is legal and insurance commentary, not advice. The Building Safety Act 2022 regime is technical and fact-sensitive — consult specialist counsel and your broker on your specific position. Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority, FRN 724952.