Quantity Surveyors Professional Indemnity Insurance
A quantity surveyor is trusted with the money. Budgets, tender analysis, interim valuations and the final account all rest on the practice's figures, and errors can result in readily quantifiable financial losses, which makes the loss unusually easy for a claimant to prove.
Overcertification is an important claims exposure. Where interim valuations have certified more than the work justified and the contractor then becomes insolvent, the employer cannot recover the overpayment from anybody except the person who certified it.
Cost advice at the front end produces a different exposure. A budget that proves materially wrong may cause a client to commit to a scheme that was never viable, and the claim is framed as the loss caused by proceeding rather than by any construction defect.
We can advise quantity surveying and cost consultancy practices on professional indemnity, including where the role extends into contract administration, employer's agent or project management duties.
Common claims and risk exposures
The exposures that produce claims in this trade, rather than a generic list.
Overcertification before an insolvency
Interim certificates issued for more than the value of work properly executed. The exposure only becomes a loss when the contractor fails, which is why claims in this class cluster in downturns rather than spreading evenly.
Estimates and budgets that prove wrong
An initial cost plan materially below outturn, causing a client to proceed with a scheme they would otherwise have altered or abandoned. Disputes turn on the assumptions stated at the time and whether the risk allowances were reasonable.
Measurement and quantity error
Errors in taking off quantities feed into tender documents and pricing. Depending on the contract, the consequence may be a variation the employer has to pay for, and the employer then looks to the practice that produced the document.
Final account and claims assessment
Settling a final account involves judgement on variations, loss and expense and extensions of time. A settlement later argued to be too generous produces a claim from the employer, and one argued too harsh produces a dispute with the contractor.
Role creep into administration
Practices frequently act as employer's agent or contract administrator alongside cost work. Those roles carry duties beyond cost advice, and insurers need to know they are being performed.
The cover we arrange
We arrange professional indemnity and related insurance around the services you provide, the clients you work with and the contractual requirements you face. The appropriate cover and limits will depend on your individual activities and the terms available from insurers.
Professional indemnity
Claims arising from negligent cost advice, measurement, certification and contract administration. Claims made, with the retroactive date reaching back across the practice's history.
- Cost advice and estimating
- Valuation and certification
- Final account settlement
- Claims made, with retroactive date
Certification and employer's agent duties
Cover extending to the administrative roles a cost consultant commonly takes, which carry duties that ordinary cost advice does not.
- Interim certification
- Employer's agent under design and build
- Extensions of time where assessed
- Disclosed as separate activities
Run off
Continuing cover after the practice ceases. Certification claims often surface only when a contractor fails, which may be long after the project completed.
- Continues after the practice ceases
- Claims triggered by later insolvencies
- Commonly six years or more
- Arranged before closure
Public and employers' liability
Injury and damage arising from the practice's activities, notably during site visits to value work in progress, and cover for employees.
- Site visits and measurement on site
- Damage to client property
- Employers' liability, legally required
- Office and visitors
Cyber and data
Cost data, tender information and client commercial information are sensitive and valuable. A breach exposing tender figures during a live procurement is a serious matter beyond the data itself.
- Tender and cost data
- Ransomware and restoration
- Confidentiality breach
- Notification obligations
What an underwriter will ask
Having these to hand shortens the process considerably, and usually improves the terms.
- Fee income and its split between cost consultancy, project management and employer's agent work
- Largest project by construction value, and the typical project size
- Whether interim certification is carried out, and under which contract forms
- Sectors worked in, and any public sector or framework appointments
- Procedures for checking measurement and valuation before issue
- Appointment terms, liability caps and net contribution clauses
- Claims and notified circumstances over the last six years
- Whether the practice is RICS regulated
What affects the cost of your insurance?
The main factors insurers consider when assessing the premium.
Certification volume and value
The main driver. A practice certifying payments on large projects carries the overcertification exposure that defines this class, and the construction value certified matters more than the fee earned.
Project values relative to fee
As with engineering, insurers look at the value the advice controls. Small fees on very large schemes are the profile that produces disproportionate claims.
Additional roles taken
Employer's agent and project management duties widen the exposure beyond cost advice and are rated accordingly, particularly on design and build contracts.
Economic conditions
This class is sensitive to the construction cycle. Insurers rate cautiously when contractor insolvencies rise, because that is when latent overcertification exposures become claims.
Conditions and exclusions to consider
Terms vary between insurers, so treat these as the questions to ask rather than a description of any one policy.
Insolvency of others as such
The policy answers negligent certification, not the fact that a contractor failed. Where certification was proper, the employer's loss on an insolvency is a commercial loss rather than a claim against the practice.
Fitness for purpose and cost guarantees
An appointment that guarantees an outturn cost rather than promising reasonable skill and care creates an obligation beyond what professional indemnity answers.
Undisclosed project management
Where a practice takes on programme, procurement or design coordination duties without disclosing them, those activities may sit outside the cover written for cost consultancy.
Trading losses of the practice
Fee disputes, unpaid invoices and the practice's own commercial losses are not professional indemnity claims, though a fee recovery action is a common trigger for a counterclaim that is.
Common questions
What is overcertification and why does it matter so much?
Certifying an interim payment for more than the work properly executed. It causes no loss while the contractor is solvent, because the account corrects itself later. It becomes a claim when the contractor fails and the employer cannot recover the overpayment from anyone but the certifier.
We act as employer's agent as well. Is that covered?
Only if disclosed. Employer's agent duties under design and build go beyond cost advice into administration and certification, and insurers price them separately. Undisclosed, they may sit outside the cover you have.
How do insurers set our limit of indemnity?
Mainly on the construction value your work controls rather than your fee income, and often on what your appointments require. A practice certifying on a twenty million pound scheme needs a limit that reflects that, not its own turnover.
Does a fee dispute put our insurance at risk?
Suing for unpaid fees frequently produces a counterclaim alleging negligence, which is a claim under the policy. It is worth notifying your insurer before starting recovery action rather than after the counterclaim arrives.
Speak to a specialist who understands your industry
Tell us about your business and the work you undertake, and we will come back to you with cover options built around it. Call 01304 262880, or email us with a phone number and the best time to call and a broker will ring you back.