Architects, Surveyors’ & Similar Fees – what cover is being provided to an Insured?
This question has been put to me by several of the LMI team who are being advised by loss adjusters that these fees are only in respect of the reinstatement.
So, this then leads to the question of when does reinstatement commence and what does it include?
Claims where this debate seems to be reoccurring is under the Industrial Special Risks (“ISR”) policy.
The answer lies within the words of the benefit itself.
This clause, Additional Benefit a) reads:
a) Subject to the liability of the Insurer(s) not being increased beyond the Limit(s) of Liability already stated herein, the Insurer(s) will also indemnify the Insured for:Architects’, surveyors’, consulting engineers’, legal and other fees and clerks’ of works salaries for estimates, plans, specifications, quantities, tenders and supervision necessarily incurred in reinstatement consequent upon damage to property hereby insured but not such costs, fees and salary for preparing any claim hereunder.”
It would be ludicrous to suggest that an architect or engineer cannot be appointed by an insured until, physical reinstatement of the property had commenced.
In the claims that I have been personally involved in, including that at my own home, which only involved one room, I have not been presented with a scope of works that covers all the damage. It is prudent for any Insured to have an expert that they trust, skilled in such matters, to prepare and or review the scope of works to ensure that the works are sufficient to reinstate the building in accordance with the terms and conditions of the policy.
With what appears to be an increasing number of complaints against builders of late, the work of the building expert should not stop at agreeing the scope of works but supervising the reinstatement to ensure that the quotations are fair and reasonable and no shortcuts are being taken in the reinstatement.
A honourable insurer should have no concerns as this ensures their premium paying insured obtains their full entitlement in the event of a valid claim and often results in a lower repair cost for the Insured.
As an example, a person who is part of LMI Group is assisting her brother with a claim involving farm buildings. The first builder appointed by the insurer stated that there was no damage to the building despite it being hit by a severe well published hail storm and tornado.
When this was challenged, a second builder was appointed and he stated all buildings on the property needed to be replaced due to storm damage.
This too was a nonsense as whole sections of roofs were protected by solar panels. A dishonest Insured would have accepted this and got all new roofs at the expense of the Insurer. Of course, one of our team would never knowingly be a party to that and so they got their own quote for only what was truly damaged in the storm, but this has not been accepted and the insurer has appointed a third consultant.
All this has been going on since October and still no roof has been replaced, a tarp over a leaking roof has been torn to shreds and the client is wondering how can an industry that handles so many thousands of claims get it so wrong.
This is only a relatively small claim, compared to the major ones where the Insured is being forbidden to appoint their own engineer to agree the scope of works.
The original drafters of the ISR policies, who, to my mind had a great social conscience and pride in the insurance profession, would not be happy that the words in this benefit are not being honored as they ought.
If the scope of works can be developed and agreed promptly and the tender process started with some certainty that there will be no variations, any business interruption claim is thereby reduced.
To do otherwise is penny wise and pound foolish not to mention, the customer dissatisfaction that it creates.