New insurance obligation for intellectual professions in the construction sector from 1 July 2019

Let’s go back to 1 July 2018 when the Peeters Act entered into force. From that moment on, with housing construction projects in Belgium, contractors, the architect and other service providers in the construction sector (read: engineering firms) whose ten-year liability could be compromised (defects threatening building stability – Articles 1792 and 2270 of the Belgian Civil Code (B.W.) would be required to insure themselves in this regard.

Because of this new legislation, there are now two types of liability insurance required by law in the construction sector:

• The law concerning the mandatory ten-year civil liability insurance (the Peeters Act) has been in force since 1 July 2018;
• The law concerning mandatory professional indemnity insurance enters into force on 1 July 2019.

The first only insures the ten-year liability for housing construction in Belgium and is mandatory for contractors, the architect and other service providers in the construction sector (read: engineering firms).

The second only insures the professional indemnity for all construction projects in Belgium and is mandatory for the architect, the surveying expert, the health and safety coordinator and other service providers in the construction sector (read: engineering firms).

The introduction of this new law means that:

• for housing construction in Belgium:
  • the architect, the contractor and the engineering firm are required by law to insure their ten-year liability.
  • the architect, the engineering firm, the surveying experts and the health and safety coordinator are required by law to insure their professional indemnity.
• for all other construction projects (non-housing construction) in Belgium:
  • the architect, the engineering firm, the surveying experts and the health and safety coordinator are required by law to insure their professional indemnity.

Important new development in both of these types of insurance: all contractual documents of a construction project must, from now on, state both the name and the company number of the insurance company as well as the number of the insurance contract. The legislator’s intention is clear: to inform the property developer about the contact information of the insurance company so that he can contact it in case of a claim.

The ten-year liability for defects that threaten building stability is not covered in the new mandatory professional indemnity insurance in the construction sector.

We note that these laws only concern the obligation to be insured. “The liability rules themselves do not change, of course,” says Laura Roelant, Vanbreda Risk & Benefits construction insurance expert. “That is why it is certainly recommended for architects and engineers responsible for stability to retain a ten-year liability coverage for all projects. Those who are considered liable but are not insured will, of course, be held accountable for the assessed costs.”

According to Vanbreda Risk & Benefits, the changes to the statutory insurance obligation may possibly also result in new insurers positioning themselves on the market to provide professional indemnity coverage for intellectual professions in the construction sector.