For engineers in New South Wales, the Professional Indemnity (PI) market has shifted proactively in the last five years. Following the Lacrosse and Grenfell tower incidents, and the subsequent tightening of the National Construction Code (NCC), engineers are now operating in a “hard market.”

Premiums have risen, but more worryingly, policy exclusions have broadened.

At Southside Insurance Brokers, we understand that for Structural, Civil, and Hydraulic engineers, a PI policy is not just a tick-box exercise—it is your licence to operate.

Here is a guide to the specific design and certification risks facing your profession today, and how to ensure your insurance actually protects you.

1. The “Fitness for Purpose” Trap

The most common gap we see in engineering contracts is the difference between your Standard of Care and a Fitness for Purpose warranty.

• The Legal Standard: Under common law, an engineer is required to exercise “reasonable skill and care.” Your PI policy is designed to cover you if you fail this standard (negligence).
• The Contract Trap: Many D&C contracts require you to warrant that the design will be “fit for its intended purpose.” This is a guarantee of a result, regardless of negligence.
• The Insurance Gap: Most PI policies exclude liability assumed under a guarantee or warranty that exceeds the common law standard. If a design fails but you were not negligent (i.e., you followed all standards, but the result wasn’t “fit”), you may be uninsured.

Risk Mitigation: Always have your contracts reviewed. We can help negotiate “limit of liability” clauses that align with your insurance coverage, rather than signing broad “fitness for purpose” warranties.

2. Certification of Works (The “Site Inspection” Risk)

Signing a compliance certificate (such as a Design or Installation Certificate) is one of the highest-risk actions an engineer takes.

If you certify that a structure complies with the NCC, but the builder substituted a material on-site without your knowledge, you can still be held liable for the rectification costs.

Risk Mitigation:

• Never certify work you haven’t personally inspected or received verifiable evidence for.
• Ensure your PI policy includes coverage for Statutory Liability, which can assist with fines or inquiries from the Board of Professional Engineers or Fair Trading.

3. The “Non-Conforming Building Products” Exclusion

Since the cladding crisis, insurers have added broad exclusions regarding non-conforming building products (NCBP).

However, some cheap policies have exclusions so broad they effectively remove cover for any material that doesn’t meet strict compliance, even if it has nothing to do with cladding (e.g., imported steel or glass).

Risk Mitigation: You need a broker who reads the fine print of the Specific Endorsements. We ensure your policy exclusion is limited specifically to combustible cladding, not a blanket exclusion that leaves your general design work exposed.

4. Understanding “Claims Made” vs. “Occurrence”

Unlike Public Liability, your Professional Indemnity is a “Claims Made” policy.

This means you are covered by the policy in force when the claim is made, not when the work was done.

• The Scenario: You designed a foundation in 2018. You retire or switch insurers in 2024. A crack appears in 2025.
• The Risk: If you do not have a policy (or “Run-Off” cover) in place in 2025, you have zero cover for the work done in 2018.

Risk Mitigation: We advise all engineering firms on Run-Off Cover provisions to ensure that past liabilities don’t haunt you in the future.

Summary: Engineering Risk is Not Standard

You cannot rely on an automated online quote for engineering risk. The stakes are too high, and the exclusions are too technical.

At Southside Insurance Brokers, we speak your language. We understand the difference between a performance solution and a deemed-to-satisfy provision, and we know how to place hard-to-insure engineering risks.

Contact us specifically for a review of your PI exclusions and contractual limits.

Telephone: (02) 9542 5151

Email: info@southsidebrokers.com.au