Fit-out firms that design: the liability your contracting policies don’t answer
When did you become a designer?
Few fit-out firms decide to become design practices; it accretes. The client wants one point of responsibility, so the contract is design-and-build. The architect’s drawings stop at “intent” and someone must develop them into something buildable. The M&E coordination lands with whoever is actually installing. Space planning, partition specifications, reflected ceiling plans, joinery details, load calculations for a mezzanine — each is a design decision, and the business making them is doing professional work with professional liability, whatever it calls itself. The insurance programme, meanwhile, often still describes a contractor: CAR, public and employers’ liability, plant. Everything except the thing now most likely to generate a large claim.
Why CAR and PL don’t answer a design error
Contractors’ all-risks responds to physical loss or damage to the works during construction — the fire, the flood, the theft from site. Public liability responds to injury or damage to third parties and their property. A design error usually presents as neither: the mezzanine that fails its loading assessment, the services layout that clashes with the structure and must be re-run, the acoustic or fire-stopping detail that does not meet the specification, the scheme signed off and built that the landlord’s surveyor then rejects. The loss is rework, delay and diminution — economic loss flowing from a professional mistake — and it needs a professional indemnity policy. Where a design error does cause physical damage, the position is worse, not better: the liability policies’ design-related exclusions become the battleground, which is not where anyone wants to discover their programme’s shape.
Novation: inheriting someone else’s design
Design-and-build procurement routinely novates the client’s design team to the contractor. From novation onward, the designer works for you — and, critically, you answer to the client for the design, including work done before you arrived. The claim for a defective scheme comes to the contractor first; recovering from the novated designer is your problem, subject to their PI, its limit and its insurer. A fit-out firm accepting novation without its own design liability cover is accepting a professional exposure with no professional policy behind it.
JCT and the Contractor’s Designed Portion
Even outside full design-and-build, JCT contracts routinely pass design liability to contractors through the Contractor’s Designed Portion — historically via design portion supplements, now built into the standard forms. If your contracts include a CDP for partitions, services, joinery or anything else, you hold design responsibility for those elements as a matter of contract. Check two things against it: that the PI programme exists and describes the design work, and that any fitness-for-purpose language in the contract has been reconciled with a policy that, like most PI, is built around reasonable skill and care.
Getting the programme to match the business
The shape that works is unglamorous: PI described to cover design, specification and coordination as actually performed — including design subcontracted but contractually owned — sitting alongside CAR, public and employers’ liability, with the claims-made mechanics (retroactive date, continuity) checked because design claims surface long after practical completion. If your problem is not design liability but simply being declined or mispriced by online forms, that is a different conversation with its own page — see the hard-to-place shopfitters guide below. This page exists for the moment a fit-out firm realises its drawings are the risk.
FAQ
Doesn’t contractors’ all-risks cover design mistakes?
No. CAR insures physical loss or damage to the works while they are being built — fire, flood, theft, collapse during construction. A design error whose consequence is rework, delay or a scheme that does not meet requirements is not physical damage to the works, and even where damage does result, CAR wordings are not written to answer for defective design. The design exposure needs professional indemnity.
We subcontract all design to an architect — do we still need design cover?
Usually yes. If your contract with the client makes you responsible for design — as design-and-build and Contractor’s Designed Portion arrangements typically do — the client claims against you, and you then look to your designer. Your PI responds to the claim and supports the recovery; relying on the subconsultant’s policy alone leaves you exposed to its limits, its exclusions and its insurer’s view of the matter.
What is a Contractor’s Designed Portion?
A mechanism in JCT contracts by which the contractor takes design responsibility for defined parts of the works — in fit-out, often things like partitions, services coordination or specialist joinery — within an otherwise employer-designed contract. If your contracts include a CDP, you carry design liability for those elements and your insurance programme should reflect it.
Our contract says the design must be ‘fit for purpose’ — does PI cover that?
Treat this as a red flag to check. PI policies generally cover liability arising from a failure to exercise reasonable skill and care; an obligation guaranteeing that the design will achieve a particular result can go beyond that, and liability assumed purely by contract may fall outside cover. Where fitness-for-purpose language appears, the wording of both the contract and the policy needs looking at before signature.
We’ve been declined or priced off online forms — is this the page for that?
That is a related but different problem, and it has its own page — see our guide for hard-to-place shopfitters. This page is about the design liability angle: what happens when a fit-out firm’s drawings, specifications and calculations are the thing that went wrong.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This page is general information, not advice on a specific policy.