In the course of his judgement, one of the Law Lords, Lord Bingham of Cornhill, made what to some in the insurance market was a strange statement when he said :

"It would no doubt have been open to TYP and HLP to seek to be included as co-Insured in the joint names insurance or to have made other arrangements. In reality the present issue arises between TYP and HLP’s indemnity Insurers on the one side and the joint names insurance on the other. The latter have provided the full indemnity they undertook to give. The real complaint of the former is the failure to take steps to guard against the contingency which has in fact occurred, a contingency which could in my opinion have been foreseen had the right questions been asked at the right time".

With respect to Lord Bingham and ignoring questions of insurable interests and that one is dealing with two different insurance markets it is unlikely that a request by TYP/HLP to be added as co-Insureds in the CAR policy would have been greeted with anything other than outright rejection. Whilst it is often the case that professional consultants are added as Insureds in CAR/EAR policies the extent of the cover provided to them is restricted to the liability section of a policy and is for site activities only. The intention is not to provide any cover at all for design or supervisory activities.

Quite how professional consultants would gain from being co-Insureds in respect of the works is unclear, bearing in mind firstly that many CAR/EAR policies exclude liability for the remediation of design and other defects in the contract works. It may be that Lord Bingham had in mind that if a professional was a co-Insured he would then be immune from actions by way of subrogation. This is a subject which has engaged the attention of the construction and engineering market in recent times. The general view in that market is that it is not desirable to waive or abandon any rights which the Insurer may acquire against the consultant. If the consultant is to be a co-Insured then it should be for "site activities only" and the policy provisions should be tailored to that effect.

The tailoring of policy provisions may occur in two ways :

  1. In the liability section, liability for design and/or supervision for a fee (and without any supply of goods, works or materials) should be excluded.

  2. In any express waiver of subrogation in the policy it should be made clear that the right of subrogation is waived only to the extent that the claim is insured by the Policy for the benefit of the consultant.

In the opinion of those who represented TYP and HLP in the CRS case it is manifestly unjust to impose upon professional consultants 100% of liability when their actual contribution to a loss event may be as low as 1% and when they are unable to secure a contribution from those (contractors and sub-contractors) who are likely to have been guilty of a far greater contribution. One is compelled to concede that such an opinion has merit. The remedy, however, is not as Lord Bingham suggests. The construction and engineering insurance market cannot and should not be the dumping ground for every liability which might arise. A better suggestion would be to amend either the Civil Liability (Contribution) Act 1978 and/or to dispose of the much disliked and much criticised joint and several liability of those liable in tort so that a party is liable only for the loss or damage he or she causes and not that caused by others.

The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.