Building control - Approved inspector insurance

“The availability of indemnity insurance for Approved Inspectors has greatly reduced. This leaves many construction projects potentially having to switch to already overloaded Local Authorities, putting projects at risk of certification delays.”

Background

Construction and refurbishment work of any significance must satisfy UK Building Regulations and this needs to be confirmed before, during, and at completion. This compliance process can either be overseen by the Local Authority or by a licenced and insured third party Approved Inspector. Local Authorities have limited resources so using an Approved Inspector is frequently favoured because this independent consultant will work closely and more actively as part of the project team.

Approved Inspectors must hold specific government approved Professional Indemnity insurance because of the nature of their statutory role. Until recently two providers offered this insurance – Howden and Griffiths & Armour (G&A). Recently, in an insurance market shaped by the events at  Grenfell Tower, Howden lost its underwriting and is no longer able to renew existing policies. This leaves G&A as a sole insurance provider. The Approved Inspector community and the government are in dialogue about how to address this, but a solution may take some time.

Potential Impacts

• The remaining insurance provider, G&A, is imposing stricter restrictions and protection measures on those it already insures. For example, Approved Inspectors will no longer be willing to provide Collateral Warranties; net contribution limits and other risk protection measures will likely be required in their appointments.
• G&A is becoming more selective about providing cover to new Approved Inspectors and is reviewing renewals much more critically.
• Where insurance ceases to be available Approved Inspectors can no longer undertake the Building Control function. This means they are unable to certify design or works as safe for occupation.
• The issue could immediately affect both tenant and contractor obligations under Agreements for Lease, leases or fit-out guides.
• It’s likely Inspectors with insurance still in place won’t be willing to take on any in-progress projects from others, meaning these projects need to go back to Local Authority control as the default.
• This sudden increase in a Local Authority’s workload may well result in project delays because of insufficient resources .
• Where is change is possible, different inspectors may interpret design intent and the application of Building Regulations differently.

Immediate Advice

• Clients and their professional advisors should check the status of Building Control cover on all their projects. Approved Inspector status can be checked here.
• A review of any possible contractual default in legal agreements and building contracts is recommended.
• If they remain insured by G&A, the insurer will likely impose restrictive protection measures. These should be fully understood and discussed openly with project teams and landlords.
• The issue should be added to project risk registers and monitored closely.
• Delay and contingency plans should be considered.

 
For further information and guidance please contact Richard Morris, Design and Build Fit Out, Building Consultancy.