What happens when an architect makes a professional indemnity claim?
The PI policy that matters isn’t the one you had when you did the work. It’s the one you have right now.
When a PI claim is made against an architect, the insurer appoints solicitors and technical experts to manage the defence, covering both the settlement and legal costs. But it’s the structure of the policy, not just the headline limit, that determines whether you’re adequately protected. Here’s a real case that shows why.
A £400,000 claim and the detail that nearly made it worse
An architect completed a small residential apartment development in 2019. Four years later, water ingress appeared across multiple units. Investigations identified inadequate detailing in the original design, the façade, windows, and drainage systems. The developer brought a claim against the architect and contractor. By the time it was resolved, the total exceeded £400,000. Over £100,000 of that was legal and expert fees alone. The PI policy responded and the claim was settled. But that £100,000 in defence costs is the detail most architects miss.
Why do defence costs matter as much as the indemnity limit?
If defence costs sit inside the indemnity limit, rather than on top of it, they eat directly into the funds available for remediation. In a contested, investigation-heavy claim, that gap can leave a practice facing a shortfall when it can least afford one. A policy written on a costs in addition basis keeps defence costs separate from the main limit. It’s a structural detail that rarely gets discussed at renewal, but in a claim like this one it’s the difference between adequate cover and a problem.
What does “claims-made basis” mean and why does it matter?
PI insurance responds at the time a claim is made, not when the work was carried out. A project completed in 2019 sits under whatever policy is active when a claim arrives in 2023 or 2026. This is why reducing your limit in a quieter year carries real risk. If a project from three years ago surfaces a claim today, it’s today’s policy that must respond. In our experience, practices caught out by this rarely saw it coming – they’d simply cut their premium (cut/reduced their indemnity limit) without thinking through the exposure that was already sitting on completed work.
What should architects take away from this?
Three things are worth reviewing before your next renewal:
- Whether your policy is written on acostsin addition basis.
Defence costs in a complex claim regularly exceed £100,000. If they sit inside your limit, you may not have enough left to cover the actual loss. - Whether your limit reflects your completed project exposure, not just your current workload.
The riskiest moment is often years after the work is done.
- Whether you’ve thought about run-off cover if your practice closes or merges.
Claims-made means the exposure doesn’t disappear when the policy does.
At Konsileo, this is what we walk through with architecture practices at renewal – not just what the limit is, but whether it’s the right limit given everything that’s already been built.
