PI Insurance & AS 4122 - 2010

Richard Young , 29 December 2013

Signing the AS 4122 – 2010 General Conditions of Contract may put your PI insurance at risk. The ACA – WA is working to rectify this. Richard Young, ACA – WA President, outlines the issues and progress thus far.

ACA members are increasingly required by their clients to use AS 4122 – 2010 General Conditions of Contract for Consultants for the provision of architectural services on projects. Since its inception in 2010 this contract seems to have become the ‘standard’ for the industry, although in many cases clients see fit to amend it!

Many ACA members arrange professional indemnity insurance through Architects Professional Risk Services (APRS), who routinely advise that certain clauses in AS 4122, if not deleted or amended, could jeopardise cover under the APRS Professional Indemnity Insurance policy. Yet, when trying to secure an important commission in these difficult economic times, it is rarely possible to convince clients that they should amend this contract in the architect’s favour, particularly when, more often than not, we are trying to prevent them from making more onerous amendments to the standard.

Given that this document is an Australian Standard, the ACA believes that members should be able to sign it unamended without the fear of compromising their insurance cover.

The ACA – WA Chapter recently wrote to APRS to seek general agreement to accept this document in its entirety when used by our members on normal projects where a standard architectural service is being provided. As a result they are now in discussions with Vero, the Architects PI Facility insurer. The following is an extract from the Architects Professional Risk Services letter in response:

The 2010 version of the agreement is, in our opinion, a significant improvement on the 2000 version, which it supersedes. As addressed in our note, there are three clauses in the standard for of the agreement – Clauses 4, 23.4 and 28 – which, in our view, may result in claims that enliven the ‘assumed liability’ exclusion under the Architects Facility policy. 

We understand that many clients expect their consultants to accept the standard terms of AS4122-2010 without amendment, simply due to the fact that the agreement is an Australian Standard agreement for use when engaging consultants. We appreciate that even when aware of the risks, it is often difficult, due in part to uneven bargaining power and the pressure of competition, for your members to resist this pressure.

The Architects Facility Policy

The Architects Facility Policy was established to provide architects with consistent and comprehensive policy coverage. The policy has been modified numerous times to address emerging issues facing the profession – most recently in relation to cover for ‘safety in design’ prosecutions.

We recognize that being engaged under an industry standard contract which includes clauses that raise potential insurance risks is an enduring area of concern for architects. In response to your correspondence, a decision has been made to refer your request for insurer’s acceptance of the standard terms of AS4122-2010 to Vero.

We will keep you informed of the progress of our discussions with the Architects PI Facility insurer – Vero in this regard.

 

Richard Young is ACA – WA President. This article was first published in ACA Communique, July 2013. 

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