Across the industry, attention is squarely trained on the re-cladding and renewal of flammable cladding, and with good reason. Yet persistent uncertainty over which party should be held accountable at each phase of the building process confronts subcontractors with lingering professional indemnity (PI) concerns
In the aftermath of Grenfell, there has been a deepening sense that we can no longer depend on the provisions that once shaped the framework of the profession. The conclusions of the Grenfell Inquiry have so far identified alarmingly inherent issues that are systemic and concern design, product trialling and building techniques.
The construction industry passes the blame for who is responsible for safety
While five years have passed since Grenfell, there’s no complete understanding of who or what was to blame for the disaster. Instead, pockets of the sector try to pass the blame and avoid responsibility, sustaining an atmosphere that encourages a ‘race to the bottom’.
This general industry disconnect creates division and damage through a lack of understanding of the liability for evaluating potential hazards in design, construction, and occupancy.
Mitigating end-user risk and unforeseen contractural weaknesses
Major construction firms can take proactive steps to mitigate end-user risk and unforeseen contractual weaknesses by, for instance, hiring advisors and solicitors. Smaller, local businesses that lack the expertise or assets for doing likewise might be utterly oblivious to current law or merely wish and hope for the best.
The Building Safety Act, now enacted, intends to address these vague areas in accountability by establishing safeguards and procedures that foster collaboration and responsibility. More openness and information exchange are admirable goals, but as matters stand, they appear distant.
An industry steeped in indecision
As liability passes from the building proprietor to the architect, builder, subcontractor and fitter, insurers are naturally anxious, calling for increasingly in-depth evaluations of structures while raising premiums and imposing sweeping exclusions.
It has become almost impossible throughout the sector to secure complete professional indemnity cover for cladding design without prohibitive exclusions. The blame game rages on.
Providers of cladding are classed as manufacturers – legally, therefore, they bear some design accountability. This implies that they assume some liability for the design, particularly if they are installing hangers to boards or are fabricating cassettes.
But although a supplier might provide a static calculation for a project, faced with a claim they would likely argue that the calculations were provided as a service, for guidance, and that the responsibility lies with the installer’s engineer to check the calculations.
The supplier might provide a warranty, but it doesn’t constitute a contractual link and there is unlikely to be detail around what exclusions or conditions the supplier is passing on to the installer.
‘Smaller businesses may be required to double their PI coverage’
Major subcontractors with greater resources are sourcing their own PI insurance cover for design. But as a subcontractor, we see a considerable gap in the insurance landscape. Unless the government spells out precisely the risks involved, the PII sector will remain exceedingly guarded.
Insurance premiums may affect the safety of developments with excessive rates and redundant disclaimers that smaller companies cannot or will not honour. Some smaller businesses may be required to double their PI coverage. Some firms will simply struggle to pay for this kind of hike and, confronted with a prospective claim, might simply conclude that it is simpler to stop business and perhaps start afresh under a new name in the future. The claim lingers in no man’s land.
What action is the government taking to reassure cladding subcontractors?
In February 2021, the government announced a compensation programme aimed at those practitioners not in a position to secure liability coverage for signing the EWS1 fire prevention certificate. This was intended to alleviate the shortfall in the amount of fire safety inspections available.
This is likely a sign of things going in the right vein (the government recognises that the absence of liability insurance is a “major obstacle”). The scheme will boost the number of professionals who can complete the application form demanded by mortgage providers after the government broadened its prohibition on combustible outer wall cladding to include structures higher than 11 metres.
Some headway has also been achieved thanks to the Construction Playbook, which presents best practice and sets out the government’s expectations for cooperation in the supply chain, product and service standardisation, and the encouragement of transparency. In theory, this is all fantastic, but it must be shown exactly how it will be implemented.
It is understandable that contracting bodies and principal contractors, requiring an in-depth grasp of their responsibilities, might not be fully conscious of the complexities presented amidst disarray and constrictive PI. The confusion may result in sections of the supply chain being compromised by rogue or misinformed subcontractors, something we must naturally jointly seek to prevent.
