Defective design rectification costs may sometimes arise from an engineer’s negligent professional services, but they are not automatically covered by Professional Indemnity Insurance.
The position can depend on:
- what caused the defect
- whether negligence or another covered civil liability is alleged
- who incurs the rectification cost
- whether third-party loss or damage has occurred
- the exact policy wording
- exclusions and excesses
- whether the insurer approved the proposed rectification or mitigation work
A distinction can arise between the cost of correcting the engineer’s own work and losses suffered by another party because of the error.
Some PI policies contain specific mitigation, rectification or loss-prevention extensions, while others may respond only where the cost forms part of an otherwise covered third-party claim. The wording varies significantly between policies.
For that reason, an engineer should not assume redesign, demolition, reconstruction or other rectification expenditure is covered merely because the original problem involved professional services.
Where practical, discuss proposed rectification with the insurer before committing to expenditure. Urgent steps needed to protect safety or prevent further loss should still be taken and documented.
