Collateral Warranties

Ensuring you aren't exposed to additional risk

As part of our service, PI Professions will check the Collateral Warranties you may be asked to sign to ensure you do not expose yourself to additional risks that are not covered under your policy.

PI Professions have the in-house expertise to check Collateral Warranties to ensure you do not expose yourself to additional risks that are not covered under your policy.

What is a Collateral Warranty?

Collateral Warranties are supplementary agreements over and above the agreement you have with your client. For example, you may sign an agreement with the main contractor and then find yourself being asked to extend that agreement by means of a Collateral Warranty to include a third party such as a financier, purchaser, tenant, a consultant or another contractor.

If you sign the Collateral Warranty agreement you will be entering into a legal relationship with a third party and creating a fresh contractual link, that would not have otherwise existed. 

This means you are accepting an additional duty of care to that third party on completion of the project. You may then find that, although you have satisfied the terms of your agreement with your direct client, the third party makes a claim directly against you for failing to meet the terms of the Collateral Warranty.

Are you covered by your professional indemnity insurance?

By signing such an agreement, you are exposing yourself to a wider range of liabilities than those inherent in the main agreement and therefore increasing your risks.

These risks may not be covered by your existing professional indemnity insurance. Here are some points to consider:

  • Signing a Collateral Warranty will increase your potential liability by adding to the list of potential claimants who are entitled to bring a claim against you.
  • Because you are increasing your risk you may have to extend your professional indemnity insurance. The cover must last as long as you are bound by the terms of the warranty. This is generally for a period of 12 years.
  • You’ll need to ensure you have cover up to the value of the Collateral Warranty.
  • If you are planning to retire or cease trading you must purchase run-off cover to comply with the terms of the Collateral Warranty you are agreeing to. Failure to do this could expose the partners or directors to personal liabilities after a business ceases trading.

Testimonials

Work is carried out efficiently, professionally and to a very high standard. We are happy in the knowledge that P I Professions will always do their best to look after our business and drive it forward. Excellent customer service!

P I Professions certainly seem to know what they are doing, really comprehensive reply giving much more advice than most are willing to offer.

I have seen lots of emails about using certain brokers but none can compare with the detailed advice & service we receive from PI Professions. The 123 page tender document was sent to them today at 09.28 and I received this reply at 11.38!

I have recently contacted P I Professions Ltd regarding professional indemnity insurance. I have received a prompt and efficient service. My requests were responded to in a timely manner, queries were answered clearly and comprehensively and key facts were delivered impeccably.

I have recently contacted P I Professions Ltd regarding professional indemnity insurance. I have received a prompt and efficient service. My requests were responded to in a timely manner, queries were answered clearly and comprehensively and key facts were delivered impeccably.

Excellent service from start to finish. We were particularly impressed by the fact Lorraine took time to come out and see us and get a feel for our business and it’s requirements. It is so much easier to explain things to someone face to face so they can grasp the business.