This case study is an anonymised composite based on publicly reported PI claim patterns. It is not actual Apex client data and does not constitute legal or insurance advice. Names, locations and identifying details have been changed. Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority, FRN 724952.
A structural and civil consultancy with sixteen engineers in two offices, fee income around £4.6m, with a strong portfolio of commercial, mixed-use residential and infrastructure work. The practice held a long-standing ISO 9001 certified quality management system and a documented internal peer review protocol.
The project was an eight-storey mixed-use building above an existing two-storey retail podium in a regional city centre. The development involved building over an existing building rather than demolition, with a transfer structure introduced at second-floor level to redistribute the loads from the new structure above onto a modified arrangement of the existing columns and a small number of new columns introduced through the retained building below. The transfer structure was a significant element of the design — large transfer beams in steel with composite action with the second-floor slab.
The structural calculations were prepared by a senior engineer with substantial experience of mixed-use and transfer-structure work. The calculations were extensive and thoroughly documented. The structure was developed through Stage 4 design and handed over to the contractor for construction.
The error was identified by the contractor’s specialist steelwork sub-contractor at fabrication stage. A specific load combination had been mis-allocated in the load combination summary — the load combination applied to one of the principal transfer beams reflected only the dead and imposed gravity loads, with an omission of the partial uplift load case that should have governed the design of certain shear connections in the proximity of the upper-storey lateral stability bracing. The error was a calculation-input error rather than a methodological misunderstanding; the engineer had picked up the wrong column from the load combination spreadsheet for a specific connection check.
The consequence was that, as designed, several shear connections on the affected beam would have been undersized for the actual load condition. The peer review undertaken by a second senior engineer within the firm had not picked up the error — the peer reviewer’s focus had been on the principal calculation pathways and the connection check had been a back-end task that did not receive the same scrutiny.
The fabricator’s flag came after a portion of the steelwork had already been fabricated but before any of the affected fabrications had been delivered to site. The error was caught in time to avoid site rework, but the redesign and re-fabrication produced cost and programme implications.
The contractor claimed against the developer for the cost and programme impact of the redesign and refabrication; the developer claimed against the engineer for the same losses. The claim was framed in negligence under Hedley Byrne and breach of the firm’s appointment. The pleaded loss was approximately £180,000, comprising abortive fabrication, redesign fees, programme delay costs and a contribution to the contractor’s preliminaries.
The engineer’s defence engaged points around the practical reasonableness of the design process, the value of the peer review (which had identified other matters and corrected them) and the fact that the error had been caught before any site impact arose. The defence did not contest the underlying error; the calculation had been wrong.
The matter resolved at mediation at approximately £124,000 inclusive of the contractor’s contribution to costs.
Section 5 notification was made on receipt of the developer’s pre-action correspondence. The wording responded subject to the firm’s £25,000 excess. The £5m limit was comfortably sufficient.
A coverage question arose on the deliberate or reckless wording. The wording in place excluded losses arising from the firm’s deliberate or reckless conduct. The claim was plainly an inadvertent calculation-input error, not deliberate or reckless conduct; the exclusion was untroubled.
A more interesting question concerned the peer review framework. The firm’s QMS required peer review on transfer structures; the peer reviewer had failed to detect the error. The firm’s appointment terms included a representation that the firm operated to ISO 9001 standards. This was a representation, not a warranty, and on the facts no question of repudiation arose. The error was not avoided by the peer review — but the peer review had not avoided the error either, which was a fair criticism that the firm acknowledged in the post-mortem.
The £25,000 excess applied. Defence costs sat in addition to limit. The matter resolved at mediation at approximately £124,000 inclusive of the contractor’s contribution to costs.
The settlement was paid. The firm undertook a structured review of its calculation peer review protocol. The principal change introduced was a more granular peer review check on connection design and load combination allocation — historically the area where errors most commonly arose and where the original peer review process had been thinnest. The firm has not had a comparable claim since.
At renewal, the firm’s PI premium rose by approximately 22%. The renewal pack included the post-mortem on the matter and the documented changes to the peer review protocol; the underwriter’s view was supportive given the proactive remediation and the fact that the error had been caught before site impact.
Calculation errors on structural design are a familiar category of engineers’ PI claim. First, peer review is only as effective as its scope; a peer review focused on the principal calculation pathways may miss errors in connection-level design where they most commonly occur in practice. Second, calculation-input errors (the wrong column, the wrong row, the wrong load case) are mechanically different from methodological errors but produce the same legal exposure; the firm’s QMS should address both. Third, errors caught before site impact are materially less expensive than errors caught after — and the firm’s process of liaising with the fabricator and contractor to catch errors at the earliest possible stage is itself a claims-reduction investment. Fourth, representations in the firm’s appointment terms about its QMS should be carefully drafted; representations are different from warranties in their legal consequences, and section 9 of the Insurance Act 2015 limits the use of “warranty” language to elevate representations into something more onerous. Fifth, the renewal narrative around a calculation-error claim should foreground the systematic remediation and the peer review process changes.
For consulting engineers, the principal value of broker engagement on a claim of this character is in the renewal conversation that follows. The underwriter wants to understand that the firm has not just paid the claim but has changed the process that produced it. We work with engineering practices on the renewal pack — including the post-mortem documentation and the peer review protocol changes — that earns the underwriter’s confidence. On the wording side, we benchmark the deliberate-and-reckless exclusion language, the QMS representation framework and the treatment of “agreed sums” with care, because the differences across the market are real.
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