Admitting liability, agreeing to compensate another party or committing to rectification costs should generally be avoided before speaking with the Professional Indemnity insurer.
Many PI policies contain conditions dealing with admissions, settlements, payments and the conduct of claims.
This can include:
- admitting responsibility
- agreeing to pay rectification costs
- making settlement offers
- signing releases
- accepting another party’s calculation of loss
Section 41 of the Insurance Contracts Act 1984 also specifically deals with liability policies that require insurer consent before settlements, admissions or payments.
There may still be urgent practical steps an engineer must take to protect safety, prevent further damage or meet professional obligations. Those steps should not be delayed simply because the insurer has not yet responded.
However, taking protective action is different from accepting legal or financial responsibility.
If a potential claim arises, notify the broker promptly and seek guidance before making commitments to the client, contractor or another project participant.
For the legislative framework dealing with insurer consent to settlements, admissions and payments under liability policies, see the Insurance Contracts Act 1984, including section 41.
