Key takeaways
Timely notification is critical for PI coverage
Claims-made policies require prompt action to protect rights.
Limitation periods vary by claim type
Understand deadlines to avoid time-barred actions.
Strong documentation underpins successful claims
Detailed records and expert reports are essential evidence.
Whether you’re a developer facing expensive remedial works or increased project costs, a lender whose security has been compromised due to flawed professional advice or a homeowner dealing with a sub-standard renovation, you may be able to recover compensation either from the professional firm that acted for you, or under a professional indemnity (PI) insurance policy, even if the firm itself is now in financial difficulty.
To protect your position, it is essential to put the professional firm on notice as soon as you believe you may have a claim against them. Failing to do this may mean there is no active PI insurance policy to claim against.
Examples of claims
There are many types of potential claims in construction projects. For example:
Claims by developers against structural engineers for miscalculations or omissions in structural designs, resulting in structural failure and/or safety risks.
Claims by lenders against surveyors for misreporting site conditions and/or incorrectly valuing a property, leading to inadequate security and therefore significant losses.
Claims by homeowners against architects for architectural design flaws, leading to inadequate or unsafe structural issues.
Claims by developers against Employers Agents for failing to address payment applications in a timely manner, including failure to serve relevant documents such as Pay Less Notices.
Claims by lenders against solicitors due to defective reports on title, leading to flawed security and therefore significant losses.
In proving any claim, you will need to establish these four basic elements, irrespective of who the opponent is:
The professional owed you a duty of care;
That professional failed to meet the standard of care that a reasonably competent professional in the same field would have provided;
The breach of duty caused your loss; and
You suffered a quantifiable loss because of the breach.
Why timing is everything
Most PI insurance policies in the UK are written on a claims-made basis, meaning that cover is provided when a claim is made and reported during the active policy period, irrespective of when such alleged negligence occurred. This makes the timing of the notification very important. Claims against solicitors benefit from a mandatory six-year run-off period for PI insurance, from whenever the firm ceases trading, but other professionals, such as architects and engineers, do not have the same regulatory obligation.
It is worth bearing in mind that we are fast approaching the six-year anniversary of the Covid-19 outbreak. During the pandemic, many projects were completed under significant pressure, with limited oversight of the contractors that were able to operate and with developers often having to rely on remote professional services. At Hill Dickinson, we are seeing cases where only now defects in the original design of a building are being discovered because the usual checks and balances, during the 2020 and 2021 period, could not be made.
When does the clock start ticking?
The law around limitation periods is complicated, and best suited to tailored advice, should you think that the period relevant to your case is approaching. The likely periods that could apply in claims involving professionals advising in a construction project are:
Type of claim | Limitation period | Trigger date |
|---|---|---|
Contract (simple) | 6 years | Date of breach |
Contract (deed) | 12 years | Date of breach |
Tort (negligence) | 6 years OR 3 years (from discovery) (but subject to a 15 year longstop) | Date damage was suffered Date claimant knew or ought to have known of damage |
Defective Premises Act 1972 (applicable to claims against those taking on work for, or in connection with the provision of a dwelling) | 15 years (post-2022 work) 30 years (pre-2022 work) This timeframe was confirmed recently in the landmark ruling of URS Corporation Ltd -v- BDW Trading Ltd [2025] UKSC | Date of completion of dwelling |
In the scenario where expiry of a limitation period is fast-approaching, it is usually recommended that a potential claimant contacts the potential defendant to suggest that a standstill agreement is entered into, the effect of which is to stop time from running for limitation purposes and then gives breathing space to consider whether there is a legitimate claim to pursue before court proceedings are issued. If that is not agreed, the alternative way to protect your position and avoid any claim from being time-barred is to issue court proceedings. As most people are aware, litigation can be expensive. However, depending on the value of your claim and the strength of its legal merits, litigation funding is another option which we can explore with you.
The importance of good record keeping
To support your claim, your case will need to be supported by relevant documentation. Ideally, a potential claimant will have detailed records of contracts and correspondence, plans, drawings and specifications, photographs of any defects (where relevant) and any expert reports or surveys obtained. If you do not hold sufficient documentation to formulate a claim, then promptly requesting the file directly from the professional firm is crucial as it ensures that you have the necessary documentation to notify of a potential claim.
If the professional firm is already insolvent, the claimant can obtain insurance information under the Third Party (Rights Against Insurers) Act 2010. The Act allows the claimant to bring proceedings directly against the PI insurer without needing to join the insolvent insured as a party. It should be noted, however, that the limitation period for claims against insurers continues to run even after an insolvency process is entered into, as confirmed in the case of Rashid -v- Direct Savings Ltd [2022] 8 WLUK 108.
Hill Dickinson are specialist professional negligence lawyers that deal with negligence claims against a range of professional disciplines. Please contact Amanda Burge and Laura Daly for further assistance with professional negligence claims.
