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Asbestos threat to PI cover

INSURERS ARE expected to drop professional indemnity (PI) cover for engineers involved in asbestos related work in 2004, the Association of Consulting Engineers warned this week.

It is advising members to cap liability for asbestos related claims when drawing up contracts.

The ACE is also advising firms not involved in asbestos related work to insert asbestos liability exclusion clauses in contracts as a precaution against claims.

'It is only prudent for a consultancy involved in asbestos related work to take seriously the possibility that an asbestos exclusion may be applied to its PI policy sometime in the next 1-2 years, ' said ACE legal director Nora Fung.

'But if you are going to be involved in asbestos related work you are unlikely to be able to exclude liability, ' Fung added.

'The best option is to limit your liability to a reasonable multiple of your fee. Or you may seek an indemnity from your client against third party claims.'

Fears about loss of asbestos insurance cover come as the government prepares to enforce tough new asbestos regulations from next year. .

Under the Regulation 4 of the Control of Asbestos at Work (CAW) Regulations 2002 the definition of those responsible for managing asbestos in buildings will be greatly extended from May 2004.

Previous regulations drawn up in 1987 made only the employer legally responsible.

Now this statutory responsibility has been extended to a new class of 'duty-holders.'

'These will include owners, occupiers, tenants, sub-lessors, management agents and facilities managers, ' said Fung.

'Among our members those affected will mainly be those who offer building surveys and site investigations, as well as facilities management.'

All duty-holders will have to carry out formal risk assessments and maintain an asbestos register, among other responsibilities.

Failure to comply with Regulation 4 could be punished by unlimited fines and/or imprisonment for up to two years.

Duty-holders will also owe a statutory duty to a number of people - not just employees - including tenants and neighbours, who could claim against them for failure to comply with the CAW regulations.

Fung said this week, it will soon be almost impossible for engineers to obtain PI cover for asbestos related work.

'Asbestos claims have caused crises for a number of major insurers, ' she said. 'There will inevitably be a reaction to these new regulations.

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