Although Dubai may seem like a construction gold mine, broker Howden offers some professional indemnity (PI) insurance advice.
As firms expand their operations internationally, there is an increased risk of being dragged into expensive litigation in unfamiliar jurisdictions.
While there is no substitute for a specialist broker who can offer advice and navigate the complexities on their behalf, firms should be aware of the liabilities they could face in conducting international business and what to consider when purchasing the rm's PI insurance.
When undertaking operations outside the EU, rms should take out worldwide PI cover to ensure they are adequately insured.
Some territories, including Dubai, insist that firms working in their region buy cover local to that territory and so it is important to use a broker with local knowledge and contacts to get the best deal.
Local policies only provide minimal cover so firms must ensure they have an adequate UK or worldwide policy to cover any claim over the local limit, or that which falls outside the local policy term.
Although Dubai may not be viewed as a high-risk territory, in general, work overseas will be regarded as representing a higher risk by insurers - especially those who do not normally cover geotechnical engineers and so do not understand the complexities of the risk.
Many Middle Eastern projects and, in particular, those in Dubai are backed by high-net-worth individuals. Insurers may well consider that these individuals will have a greater appetite for legal action should something go wrong as well as a huge pot of money to support such action.
Costs associated with a claim abroad can be high, especially it has been brought in a foreign jurisdiction and therefore outside UK law. A crucial consideration in arranging PI cover for international work is the difference between jurisdictional and territorial cover. Territorial relates to the region or country in which the work is carried out.
Jurisdiction relates to the legal authority a claim would fall into.
If the firm operates in Dubai it will need territorial cover, but jurisdictional cover may not be necessary if it can negotiate a contract that allows UK jurisdiction. This means any case will be heard under UK law and the PI premium will reflect this favourably.