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Building Safety Fund - Professional Indemnity breakthrough offers hope

In the past week, the Department for Levelling Up, Housing and Communities (DLUHC), (previously known as MHCLG), has issued new rules on Professional Indemnity Insurance (PII) requirements in the BSF stage 2 submission, after previous requirements were blocking many cladding remediation projects from obtaining government funding.

BSF Applicants, including RMC boards and RTM boards, are required to self-certify that a number of requirements have been met, with evidence filed on record, before they can submit the BSF Stage 2 submission which includes the Full Works and Costs obtained from the tendering exercise.

One such requirement was that all members of the professional team carried PII to a value of either £1m, or the value of the Works, whichever was higher. In almost all cases, the latter would apply, for example if your construction was estimated at £12m, then all members of the professional team required £12m PII. This was more ludicrous than a rebrand to become the Department for Levelling up! It is also slightly chicken and egg, because you appoint the professional team to pull together the tender, so you cannot possibly know what the value of the Works are at the time of appointing professional team members.

Most professional teams will consist of a Lead Consultant (typically a Chartered Surveyor), a Cost Consultant, a Fire Engineer, and a Facade Engineer, as well as possibly (if you're unlucky) a Managing Agent acting as Applicant's Representative. That is up to five companies which each potentially required large PII, plus the contractor on top. And a lot of these companies, particularly fire engineers, simply cannot get that level of PII. The insurance market simply won't provide it.

Fortunately, the ministry has made a huge concession in the face of reality which should unblock many stuck applications.

The first change is a a clarification that the PII requirements are only required by the main contractor and consultants with "Material Design Responsibility", not all members of the professional team. Material Design Responsibility means responsibility for any design which is integral to the structure or fabric of the building (including cladding, roofing, waterproofing).

For consultants with Material Design Responsibility, the new rules which then apply are:

1. PII capped at £10m rather than value of the Works (still essentially useless for most)

2. Collateral Warranty limitation period reduced from 12 to 6 years

3. PII must only be maintained if available at commercially reasonable rates

4. Applicant consider paying additional money to buy out any PII policy exclusion and include this cost in BSF submission

5. Consider sub-contracting to a fire engineer with sufficient PII (this one seems a pointless suggestion, as all teams already have a fire engineer).

Where none of the above helps (which I suspect still applies to 99% of projects) then this major breakthrough concession is allowed: projects can proceed with insufficient PII, if a fire engineer or other competent professional is appointed to inspect works at key milestones such as cladding removal, installation of cavity barriers, fire stopping, cladding install and completion. In practical terms, most would use this route, and any decent Lead Consultant worth their salt should already have been specifying regular and milestone inspections anyway before this rule change.

A big win for leaseholders and hopefully evidence the ministry is listening. In the following months, with this blocker removed, more projects should move forwards. Watch this space!


If you have discovered fire safety issues with your external walls, Clad To Help provides strategic advice from a leaseholder, RMC Director, Chartered Engineer and Project Management Expert who has led his own apartment block through the highly complex Building Safety Fund process. For support which protects leaseholders and offers cost and time saving strategies, please contact to arrange an initial chat.

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