An engineering firm’s Professional Indemnity policy may cover liabilities arising from work performed by subcontracted engineers or consultants. The response depends on the policy wording, the services disclosed to the insurer and how the subcontractor is engaged.
Relevant policy questions can include:
- whether the subcontracted work falls within the insured professional services
- whether the engineering firm remains responsible to the client for that work
- whether subcontracted activities were disclosed to the insurer
- whether the policy contains conditions or exclusions affecting subcontractors
- whether the firm has accepted liability beyond its usual professional duty
- whether the insurer retains recovery rights against the subcontractor
A claim may still be made against the engineering firm where it contracted with the client and accepted responsibility for delivering the services, even when the immediate error was made by a subcontractor.
The subcontractor’s own PI Insurance can provide an additional source of protection, but it does not automatically remove the firm’s exposure or guarantee that its own policy will respond. The arrangement and the proposed services should be discussed with the broker or insurer before material subcontracted work begins.
