If you are taking some time off during the coming months, we hope you are able to make the most of it.
If you have not already done your renewal, you should now attend to this urgently.
The forms and links to the application were emailed to you with the title “NZACS Insurance Renewal - It's Time to Renew Liability Insurance” from Aon on 21/11/23. If you cannot find it, or for some reason cannot follow up with the renewal, contact nzacs@aon.com without delay.
Continuity of your cover is important.
The “claims made” basis of PI insurance means that your policy will respond if you notify the claim promptly and when the policy is current. If a claim arises now for reasons in the past, it is the policy in place now that responds.
If there is something in the past that might give rise to a claim, then you need to declare it as part of the renewal process.
If you are approaching retirement, you will need to have had 10 years continuous cover in place to be eligible for the free runoff cover.
If you are worried about setting a suitable level of indemnity, bear in mind that in residential projects your liability cannot be capped: a successful claim against you which exceeds your cover will come out of your pocket! The renewal form helpfully provides a feedback on the costs of the selected indemnity: you will probably find that your cover can be increased significantly at relatively minor additional cost.
Whilst house and general insurance has gone up 20~30% in the past year, PI cover has typically been closer to a 5% increase overall, but the cost of your cover will depend on individual circumstances.
NZIA has asked for submissions on their draft on or before 15 December. They emailed you a link to the draft on 21/11/23. This has a significant impact on the way most of us practice, and deal with liability, so if you have comments to make to NZIA, now is your last chance.
Our website has some good guidance notes and reference material, including most of the articles from Communique and our webinars. Make use of it! You will need your email address or member number to log in, followed by a password. If you have problems logging in or cannot reset your password, or any feedback on the content, please let the Communique Editor know.
Copper pipes: The quality of copper pipework is not all the same: there have been some serious and systemic failures. Apart from the thickness of the pipe walls and the chemical composition of the water in the pipes, piping layouts or sizing which increases pressure and/or flow rates may be problematic.
Repetition: A simple mistake which occurs in multiple locations – think repeating details or apartment complexes – becomes a much bigger mistake!
Trade Data: Beware of over-egged sales blurb, or technical advice which is based on incomplete information. If you are seeking information from a technical representative, it is them, not you, that should be deciding what information is relevant and what more information they need. In the past year we have seen many examples of product/material/coatings failures, for a variety of reasons.
Maintenance: Recent claims – and a lot of the claims during the Weathertight Homes Crisis – arose out of inadequate maintenance. You might divert that risk away from your firm by providing written guidance to your clients as part of the handover process.
Minimum standards: Products or details suitable for conventional low-rise construction or which meet building code minimum requirements are not necessarily fit for purpose everywhere. Think about the particular context of each design decision. And, as part of ongoing maintenance, your clients need to be monitoring the performance of their buildings: not just complaining when things eventually go wrong.
Budgets: Budgets are usually set on preliminary information, and clients must understand that as the design evolves, so must the budget. Remind them every time a change might affect cost. If the budget requires a design/material outcome that you are not comfortable with, then that needs to be recorded in writing at the time. A valid concern is that initial cost savings may be offset by higher costs in use: operational/maintenance/replacement. It is too late to make such things known after it has failed and you plaintively cry “but I only agreed to it because you/the project manager/the funder/whatever insisted on it!” The point is, you agreed to it, you included it in your design, and several years afterwards memories are fickle and responsibilities less clear. If the original client has sold the property to the new complainant, or those responsible for the problems are insolvent, then you are firmly in the cross-hairs.
Unexpected site conditions: A frequent source of claims. The thought of endless concrete being poured into deep piles because unknown drains are being filled up is only fleetingly amusing: the consequences are certainly not. It is not uncommon either! Subsurface conditions will always be a risk, with unrecorded or mis-located services, and localised Geotech oddities. Similar unknowns lurk in altering older buildings. Why would you take the risk that the consequences may erode your fees (and increase your stress levels), when the necessary investigation costs should fairly fall on the client? It makes more sense to spend their money up front to reduce the risk of unwanted costs (for them) and re-design (for you) later. LIMs and PIMs will only provide some of the information and perhaps not much; for existing buildings you may need to obtain the full council records including inspection records for previous work.
Height and bulk controls: Designing to the maximum extent possible under the District Plan invites a negative response from affected persons. The required rebuttal may be out of all proportion to the facts. We have had many claims where the neighbour’s response has been beyond reasonable or justifiable concern. And/or the built work has varied from and thus exceeded the approvals given: intentionally or otherwise. Comprehensively document compliance/non-compliance and allow for enough leeway.
Documentation gaps: Design changes which are not fully followed through have resulted in building setout errors, clashes between existing and new work, the wrong materials/dimensions supplied to the site, and more. A particular risk threshold is when documents are issued to contractors at the same time as they are lodged for a consent, but the changes arising out of the consent processing (or client late changes) are not followed through on site.
Contract and Tort: A contract is not binding on others outside that contract. Those others who are affected by your actions may have grounds for a claim against you in tort.