CDM Regulations: insurance implications for principal designers
On the safe side
24 November 2015
Gillian Birkby examines the insurance implications for principal designers under the CDM Regulations 2015
Concern has been expressed in the construction industry that the duties of a designer, and in particular a principal designer, under the CDM Regulations 2015 are not covered by professional indemnity insurance (PII), without which an individual or organisation cannot act in that role.
Let us start by going back to basics: PII covers claims of professional negligence against a designer for a breach of their appointment. Say, for example, some of the design detailing is difficult to construct, a worker uses a ladder in an inappropriate way and falls off; the architect seems to be partly to blame for the accident.
The injured worker has various options, including a claim directly against the architect, or alternatively against the client, who in turn can pass the claim on to the architect as a breach of an express or implied term in their appointment. If the architect is sued directly by the injured worker, they can look to their third party liability insurance to cover the claim. If the claim comes from the client, as a negligent breach of the terms of the appointment, they will look to PII to cover it.
In addition, the architect could also be in breach of CDM 2015 because they have failed to design out the risk posed by the detailing so far as reasonably practicable, or failed to identify the significant residual risk. Compliance with CDM 2015 is often an implied duty under the terms of appointment.
Non-compliance is also a criminal offence, which is not covered by PII, because it is against public policy to allow anyone to insure against the risk of being fined for a criminal offence. However, sometimes the legal costs of defending a criminal action are covered by a PII policy.
The new principal designer role is that of a 'designer with control over the health and safety aspects of the project during the pre-construction phase'. It is fundamentally different from the more independent client appointed health and safety coordinator. The number of duties on a principal designer has been reduced and certain CDM coordinator responsibilities have been spread among the client and contractor team.
Those that remain are not absolute and are qualified by the term 'so far as is reasonably practicable', defined in the CDM guidance as 'balancing the level of risk against the measures needed to control the risk in terms of money, time or trouble. However, you do not need to take action if it would be grossly disproportionate to the level of risk'.
This is a fundamentally important interpretation of the regulations, together with the need for the principal designer to identify 'significant risks only' i.e. 'not necessarily those that involve the greatest risks, but those (including health risks) that are not likely to be obvious, are unusual, or likely to be difficult to manage effectively' by a principal contractor.
Taking these issues together, the duties of the principal designer are less onerous from a risk perspective. The residual CDM coordinator duties of pre-construction information collection and health and safety file preparation are relatively simple if carried out proportionately as intended.
Consequently, PII for principal designer duties is readily available from independent insurers and Royal Institute of British Architects providers. It is, however, important to obtain the level of insurance appropriate for the project, which should not be at variance with that of the designer role.
Paul Bussey is Architect and Principal Designer at Scott Brownrigg
When CDM 1994 came into force, it introduced an obligation on designers to comply with certain basic requirements in relation to the health and safety implications of their designs, so far as reasonably practicable. This has been accepted by PII insurers as being part of a designer’s duties.
A claim of professional negligence under a PII policy will not therefore be rejected, for example, for breaching a clause in the appointment requiring the architect to comply with relevant legislation. The obligations on a designer under CDM 2015 are broadly similar to those under CDM 2007, so this raises no additional issues.
The role of the principal designer is, however, a new one, although not totally dissimilar to that of the former CDM coordinator. In the past, planning supervisors and then CDM coordinators took out PII in the normal way, and again this did not cause significant difficulties with insurers.
It is important to recognise that under CDM 2015 the term ‘a designer’ is defined as someone who carries out design, and ‘design’ is widely defined.
Principal designers are not in quite the same position, partly because their duties appear, on the face of it, to be more onerous. Sometimes, absolute health and safety obligations have been incorporated into the principal designer’s terms of appointment, which has caused concern because the qualification of “so far as is reasonably practicable”, which applies to these obligations, is not always included.
On the whole, though, most insurers have treated the role of principal designer as business as usual, and therefore it is covered by PII.
However, there seem to be more difficult situations, where design is not part of the core business of the prospective principal designer. They may, for instance, be a quantity surveyor, although the Health and Safety Executive does consider them a designer for the purposes of CDM 2015.
It is important to recognise that under CDM 2015 the term ‘a designer’ is defined as someone who carries out design, and ‘design’ is widely defined. If the prospective principal designer is a designer, and also has the skills, knowledge and experience to fulfil that role, they should be able to obtain PII in the normal way.
It is also worth remembering that CDM 2015 does not require that either a designer or the principal designer hold PII. Almost all designers will wish to do so, but that is entirely separate from the obligations to have the necessary skills, knowledge and experience to carry out their roles under CDM 2015 for any particular project.
Gillian Birkby is Head of Construction at Fladgate LLP