BIM and Insurance
What are the insurance implications of BIM for architects? Alex Conlon of BJS Insurance Brokers considers the issues in this emerging field.
An insurance broker’s role is to advise clients regarding any implications that may arise to jeopardise their professional indemnity insurance (PI). BIM is something we’re keeping our eye on. To date we have received a limited number of BIM queries from architects, however we believe that this is an issue that architects should be conscious of and that we can navigate together.
Expertise on BIM is relevant to architects, construction professionals, and other professionals in the field. We are unable to provide legal advice in relation to the suitability of disclaimers or release forms – or how successfully they may hold up within the court system. However, we do have a responsibility to review and discuss possible exposures as well as their potential implications on insurance with our clients.
The two main questions we are asked are:
Are insurers placing restrictions on architects involved in BIM projects?
BIM is an emerging risk in the world of insurance. Currently, insurers are not amending their policies to specifically exclude or restrict cover arising from an architect’s involvement in BIM projects. If there is an increase in claims from this part of your professional service in the future, it is possible that insurers may respond by:
- asking additional questions during the quote or renewal process;
- placing restrictions on cover by way of endorsements; and/or
- applying higher excesses for claims arising from work on BIM projects
Is working on a BIM project risky?
A BIM project does carry heightened risks (to all those involved) in relation to the following:
Breaches of intellectual property
Lower levels of the BIM system suggest simplicity for consultants to retain ownership of their works. Higher levels carry larger exposures, with less clarity, due to the 'combined' exposure of the multiple parties involved. Most Professional Indemnity policies carry provisions to protect architects from actual or alleged breaches of IP, however, greater losses and defence costs arising from BIM project may be incurred under policies in the future.
Determining who is responsible in the event of a claim
Multiple consultants involved above a certain level of detail on BIM projects, creating various changes, could result in a lack of 'paper trail' to determine which individual was responsible for the error that contributed to a financial loss on the project. This carries implications of long-tailed legal investigations and defences if an architect was alleged to have contributed to the damages.
Contracts seen within the market already carry onerous terms that may conflict with architects' Professional Indemnity insurance. In time contracts will be introduced to better define the liabilities owed on BIM projects. It would be expected that clients and principals would look to reduce their own risk, in turn passing this to architects and other consultants.
‘Cyber’ liability (i.e. hacking and breach of confidential information by external criminals)
All businesses, big and small, are exposed to criminals intruding on their internal computer networks and servers. Various industries across Australia already face the fall out from cyber-criminals holding their network access to ransom or installing unauthorised viruses to scrape and steal data. BIM projects that are cloud hosted and hacked could result in a financial loss to all parties involved. Consider the implications of this occurring on your own projects. Don't think it's a reality? Remember the 2013 allegation that saw China blamed after ASIO blueprints were stolen in major cyber attack on Canberra HQ. The ‘bolt-on’ of Cyber Extensions under Professional Indemnity policies is an emerging solution, only offered through a few select insurers. Alternatively, stand alone policies that offer a broader level of coverage to businesses can be obtained.
At this time, it is difficult to determine how detrimental these exposures could be to an architect’s business.
Final thoughts …
I have conducted my own research using UK and USA sources available online to determine whether insurers’ policies have changed as a result of BIM projects. The UK context is particularly relevant as government projects there now mandate the use of BIM.
Currently, it does not appear that the international markets offering PI to architects are set to change. This is good news, as the Australian market tends to follow that of the UK/USA. Despite a lot of hypothetical talk and theory regarding the exposure of BIM, there is no legal precedence or hard facts that can assist us in better predicting exposure at this point in time.
The steps forward-thinking architectural firms are taking, to be on the front foot of investigating and understanding the potential risks of BIM and insurance, is commendable.
By working together and seeking input from supporting industry professionals – such as insurance brokers and legal practitioners – we can monitor the situation in tandem with the aim of minimising the commercial impact on architects and your businesses.
Alex Conlon is an account manager at BJS Insurance Brokers.