With the latest official figures from the Office for National Statistics (ONS), showing that output in the construction sector has continued to fall during 2012, it is essential for professionals to ensure that they continue to be covered by  professional indemnity insurance (PII) in the event that they leave employment, or their employing firm ceases.

The Royal Institution of Chartered Surveyors (RICS) has published guidance for surveyors on PII about the risks they face if they made redundant by a firm that provided them with PII cover.

Professional indemnity insurance is written on a ‘claims made’ basis.  This means that insurance is required when a claim is made – and not when the work was done.  This could mean that surveyors or other professionals could find themselves exposed to professional indemnity claims many years after they worked on a job and potentially even after they have left the firm that employed them at the time.  Fortunately run-off PII cover is available to professionals to provide protection in these circumstances.

The guidance from RICS sets out the position faced by surveyors if they are made redundant from a firm and covers a number of scenarios, including guidance for surveyors who were the sole principal or a consultant, a partner or director or an employee.

“It’s a sad fact that today’s difficult economic conditions have led to a downturn in the construction sector, which has also impacted the level of employment,” said James Burgoyne, director, Brunel Professional Risks.  “This has included firms becoming insolvent, which may mean that run-off PII is not arranged by the insolvent firm. It is absolutely essential that surveyors and other professionals ensure that they are fully covered by PII for jobs they have worked on with previous employers as claims could arise at any time up to 15 years after the work was completed.  This cover can either be available through run-off insurance, or as a last resort, new employers’ PII.  The key however is for surveyors and other professionals to make absolutely sure they are fully covered, rather than trust to luck.”>

The latest ONS construction figures are available here and the guidance from RICS is available here.