An architectural practice is appointed by a developer client to design a mixed-use scheme. Six months in, with the design at RIBA Stage 3, the developer changes the procurement route to design-and-build. The architect is novated from the developer to the main contractor for the construction phase. The architect now answers to the contractor on time and cost, while still owing duties to the developer (and to third parties such as the eventual building owner and tenants) on the integrity of the design.
Two years after completion, a defect emerges in the cladding interface detail. The eventual building owner claims against the developer. The developer's contract with the main contractor pushes the claim to the contractor. The contractor turns to the architect under the post-novation contract. The architect's PI policy is asked to respond.
Whether it does — and on what terms — depends on the policy wording, on the novation deed, on what collateral warranties the architect signed and to whom, and on what fitness-for-purpose or other absolute obligations the post-novation contract imposed. Design-and-build (D&B) is the procurement route that most often produces friction at the interface of architectural practice and PI insurance, and architects routinely sign up to obligations they assume their PI cover handles when in fact it doesn't.
This article explains the D&B PI landscape from the architect's perspective. It is written for principals at architectural practices that do D&B work, design managers at multi-disciplinary firms, and the in-house broking or risk teams supporting them.
For the broader architects' PI picture, the Architects PI Insurance UK Guide 2026 is the pillar; the ARB minimum terms article addresses the regulatory framework.
What design-and-build does to the architect's risk profile
In traditional procurement the architect's contract is with the client. The architect designs; a contractor builds to the architect's design. The architect's duty is reasonable skill and care in the design and contract administration. The contractor's duty is to build as specified.
In design-and-build the contractor takes responsibility for both design and build, usually with the architect novated from the client to the contractor at the end of the design stage (often around RIBA Stage 3 or 4). The architect's contract becomes one between the architect and the contractor; the architect's design becomes part of the contractor's package.
Three things shift in the architect's PI position when this happens:
The architect's contractual counterparty changes from a developer (typically interested in design quality, prepared to pay for it, with no operational incentive to push the architect on cost) to a contractor (interested in delivery to programme and price, with strong incentive to value-engineer the design and push back on architectural ambition).
The architect may pick up contractual obligations under the contractor's standard subcontract that go beyond reasonable-skill-and-care — fitness for purpose, particular performance criteria, indemnities to the contractor for losses arising from design issues.
The architect almost always has to give collateral warranties to the developer, the funder, the building owner, the tenant, and other downstream parties, repeating or extending the obligations in the post-novation contract.
Each of these shifts has a PI consequence.
Fitness-for-purpose — the standard exclusion
Most architects' PI policies cover liability for breach of the common-law and contractual duty of reasonable skill and care. They explicitly exclude liability assumed by the architect for fitness for purpose of the design — a stricter standard where the architect effectively warrants that the design will be fit for the client's stated purpose regardless of whether the architect exercised reasonable care.
Design-and-build subcontracts frequently impose fitness-for-purpose obligations because the contractor's contract with the developer often includes one, and the contractor wants to push it down to the design subconsultants. An architect who signs a subcontract that accepts fitness-for-purpose liability is uninsured for that element of the obligation.
The negotiating goal at appointment is to limit the architect's duty to reasonable skill and care. Where the contractor insists on something more, the architect needs to understand that the additional obligation is uninsured. Sometimes the commercial decision is to accept the gap; sometimes it is to walk away. Either way, the decision should be informed.
Some insurers will, on negotiation and for an additional premium, write back limited fitness-for-purpose cover where the obligation is specifically defined and capped. This is uncommon and not always available.
Novation — getting it right
Novation is the legal mechanism by which the architect's contract transfers from the developer to the contractor. The novation document is usually a deed, signed by all three parties (architect, developer, contractor), substituting the contractor as the architect's new client from a defined effective date.
PI considerations in a novation:
Liability for pre-novation work. The novation deed typically provides that the contractor steps into the developer's shoes for pre-novation work too — meaning the architect's pre-novation design is treated as if it was always done for the contractor. This is the "ab initio" novation common in UK practice. From a PI perspective this is generally fine: the architect's PI policy responds to the design regardless of who the contractual counterparty was at the time, provided the wording does not exclude novated work.
Some PI policies do exclude novated work or apply sub-limits. Check the wording. If your policy has a novation exclusion or sub-limit, either negotiate it out or be selective about which D&B engagements you take.
Continued duties to the developer post-novation. Even after novation the architect commonly has continuing duties to the developer through a collateral warranty (see below). The novation does not extinguish those duties; it sits alongside them.
Pre-existing notifications. Anything notifiable to the existing PI insurer needs to be notified before the novation happens — not because novation changes the position legally, but because the act of novation is often a moment when both sides ask questions, and a previously-unnotified circumstance can suddenly become urgent.
Collateral warranties — to whom, on what terms
A collateral warranty is a contract by which the architect undertakes to third parties (developer, funder, building owner, tenant) the same duties the architect owes to the contractual counterparty. The point is to give the third parties a direct contractual route against the architect, in addition to whatever indirect route they might have through the chain of contracts.
In D&B procurement architects can end up providing warranties to:
- The developer (whom the architect was originally engaged by, before novation).
- The funder (the lender providing development finance).
- The eventual building owner (often a different entity from the developer).
- The eventual tenants (commercial and residential).
- A facilities management or operating company for the completed building.
Each warranty is a separate contract creating direct liability to that party. Each is a separate exposure for the architect's PI policy.
The PI considerations on collateral warranties:
The duty must mirror the underlying contract. A warranty that imposes obligations on the architect beyond those in the underlying contract creates uninsured exposure. Reasonable-skill-and-care underlying contract, reasonable-skill-and-care warranty — fine. Reasonable-skill-and-care underlying contract, fitness-for-purpose warranty — problem.
Net contribution clauses. A net contribution clause limits the architect's liability to the beneficiary of the warranty to the proportion that is just and equitable having regard to other parties' responsibility. Without one, the architect can be jointly and severally liable for the whole claim even if the architect was only partly responsible. Insurers prefer warranties with net contribution clauses; some policies require them.
Step-in rights. Warranties often include step-in rights allowing the funder to take over the architect's appointment if the contractor defaults. Step-in itself doesn't change PI exposure, but the architect should understand the implications.
Assignment provisions. Warranties are typically assignable, sometimes with restrictions. An unrestricted assignment allows the beneficiary to transfer the warranty to anyone, multiplying the universe of potential claimants.
Limitation period. Warranties are usually executed as deeds, extending the limitation period from six to twelve years. Run-off cover for a practice that has issued multiple deed warranties needs to account for this.
Practical advice: maintain a register of every collateral warranty the practice has signed, the beneficiary, the date, the underlying project, the limitation expiry. PI insurers will ask about it; ARB monitoring may ask about it; and at the practice's eventual closure or sale the run-off arrangements depend on it.
What insurers underwrite on for D&B work
Underwriters will ask about a practice's D&B exposure in detail. The questions typically cover:
- The proportion of the practice's fee income from D&B engagements.
- The typical project values on D&B work.
- The contractors the practice is novated to most often — large national contractors with their own risk-management infrastructure are viewed differently from smaller regional ones.
- The types of project (residential, commercial, education, healthcare, mixed-use, cladding-involved).
- The standard subcontract terms accepted — does the practice negotiate fitness-for-purpose obligations out, or accept them?
- The collateral warranty regime — what wording is the practice asked to sign, what does the practice push back on.
- Whether the practice carries separate cover or endorsements for D&B work.
A practice that can describe its D&B contracting approach coherently — what it accepts, what it negotiates, where its red lines are — generally gets priced better than one that simply signs whatever the contractor's standard form requires.
Specific recurring problems
A few patterns recur on D&B work and produce a disproportionate share of claims and disputes.
Cladding and facade interface design. Post-Grenfell, cladding-related claims have driven a substantial share of architects' PI losses. D&B procurement is often the route by which cladding design responsibility ends up split between architect, contractor, specialist subcontractor and product supplier. Architects involved in cladding design should ensure the policy covers it, the appointment limits the architect's duty to reasonable skill and care, and the warranties match.
Co-ordination across design subconsultants. D&B architects often work alongside engineers, M&E consultants, fire engineers and others, all engaged by the same contractor. Co-ordination failures across this team produce claims that the architect may end up paying first and recovering later. The appointment should clarify the architect's co-ordination duties.
Value-engineering pressure. Contractors push for design simplifications to reduce cost. Where the architect agrees to changes that subsequently prove problematic, the architect's defence is undermined if there is no clear documentation of the contractor's instruction and the architect's reservations. File the correspondence.
Late-stage design changes by the contractor. Some D&B contracts allow the contractor to modify the design after novation. The architect's PI position becomes complicated where claims arise from modifications the architect did not make and may not have approved. Appointment wording matters.
Building Safety Act 2022 obligations. The 2022 Act introduced new duties on higher-risk buildings (above 18m or 7 storeys, two or more dwellings). The Act's duty-holder regime overlaps with CDM and with architectural appointments; some architects are uncertain about their position. PI policies are catching up; check the wording covers the Act's specific duties for higher-risk-building work.
How Apex helps
We work with architectural practices on PI cover that takes account of their actual D&B exposure rather than assuming standard residential-and-small-commercial practice profile. That means reviewing the appointment wording with the practice, identifying the points where the practice is being asked to accept obligations the PI policy doesn't cover, and either negotiating the wording, finding a different policy that does cover it, or being explicit with the practice about the gap.
We do not draft contracts — that is for the practice's solicitors — but we can sit alongside the lawyers in the appointment-negotiation conversation and add the insurance perspective.
For the Architects PI Insurance UK Guide 2026, the ARB minimum terms article and the practice merger and sale article, the links are above. To discuss a specific D&B appointment or your practice's PI position generally, see the architects sector page or contact us.