Cladding and fire-safety exclusions in professional indemnity insurance

Reviewed by Matthew Bartlett, Director, Apex Insurance Brokers Limited · Last reviewed 2026-08-05

If you design, inspect, survey or advise on buildings, your PI renewal has probably changed shape since 2017. Fire-safety and cladding wording is now one of the most negotiated parts of a built-environment PI policy. This page explains what these exclusions are, why they exist, and how to read your own schedule — without the jargon.

What a cladding or fire-safety exclusion actually does

A PI policy normally responds when a client alleges you were negligent and suffered a loss as a result. A cladding or fire-safety exclusion carves out a specific category of claim — typically anything arising from the design, specification, installation, inspection or certification of external wall systems, cladding materials, insulation or associated fire-stopping.

The breadth varies enormously. Some wordings only exclude combustible cladding on high-rise residential buildings. Others reach much wider — any fire-safety allegation on any building. Two policies with similar headline premiums can leave you in very different positions if a claim lands.

Why these exclusions appeared: a market shift, not a rule

This is the point that gets misunderstood most often. No statute and no regulator requires insurers to exclude fire-safety work. The Financial Conduct Authority regulates how insurance is sold and how claims are handled; it does not dictate which risks an insurer chooses to underwrite.

What happened is a market reaction. The Grenfell Tower fire in June 2017 exposed the scale of potential liability tied to external wall systems — remediation costs, waking-watch bills, and disputes over who specified or signed off what. Faced with an uncertain and potentially very large claims tail, insurers reassessed the risk of built-environment PI. The common responses were:

• adding fire-safety or cladding exclusions to renewals;
• reducing the limit or cover available for fire-related work;
• moving from “any one claim” to aggregate limits for these risks;
• raising excesses on fire-safety exposures.

Because it is a commercial judgement rather than a rule, the market is not uniform — and it moves. As remediation programmes have progressed and liability has become clearer for certain building types, some insurers have softened their stance. That is exactly why the wording on your specific schedule, this year, is what counts.

Who is most affected

Any professional whose advice or design can touch a building’s fire performance may see these clauses. In practice that includes:

• Architects — who hold PI as a condition of registration with the Architects Registration Board (ARB) and RIBA chartered practice membership;
• Building surveyors and chartered surveyors — RICS requires firms to hold PII meeting its minimum terms;
• Structural, civil, fire and building-services engineers;
• Fire risk assessors and fire engineers;
• Principal designers and building control professionals operating under the Building Safety Act 2022 regime.

Even if your day-to-day work rarely touches external walls, a broad exclusion can still bite on a legacy project you worked on years ago.

How the wordings differ

The label “cladding exclusion” tells you almost nothing on its own. When comparing quotes, the detail below is what changes your real exposure.

That last row matters more than people expect. Even a claim that ultimately fails costs money to defend. A policy that keeps defence costs in place, while excluding the settlement, is meaningfully better than a blanket carve-out.

What you can do about it

You cannot force an insurer to drop an exclusion, but you can improve your position:

• Present your risk well. A clear proposal showing what work you do — and, crucially, what you do not do — helps an underwriter narrow the wording to your actual exposure.
• Push for defence-costs cover even where the settlement is excluded.
• Ask for a written scope so “fire safety” is defined, not left open to interpretation at claim time.
• Mind run-off. PI is a claims-made cover. If you retire or close a firm, run-off cover carries these same exclusions forward, so the wording you accept now affects claims made years later.
• Compare across the market. Appetite genuinely differs between insurers — a broker who places built-environment PI can put your risk in front of the ones most likely to offer sensible terms.

If your renewal wording has tightened, it is worth getting a comparison quote rather than accepting the first set of terms offered.

Common questions

Is a cladding exclusion required by the FCA or law?
No. It is an underwriting decision made by individual insurers in response to claims risk after Grenfell. The FCA regulates the sale and handling of insurance, not which risks an insurer chooses to accept.

Will an exclusion put me in breach of my professional body’s rules?
Possibly. Bodies such as ARB and RICS require members and firms to hold adequate PI cover. A broad fire-safety exclusion may sit awkwardly with those obligations depending on the work you do, so it is worth checking your position and, where relevant, your regulator’s current guidance before you accept restricted terms.

Can I still get fire-safety cover at all?
Often yes, though it may come with a sub-limit, a higher excess or an aggregate cap rather than full cover. Appetite varies by insurer and by the buildings and materials you work with, which is why comparing the whole market matters.

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This guide is general information, not advice on a specific policy or a substitute for your policy wording.