Since 1 July 2019, intellectual professions in the construction industry are required to insure their civil professional liability. A consequence of the Peeters-Ducarme Act, which was introduced to supplement the Peeters-Borsus Act in order to provide even better protection for commissioning authorities in the event of disputes. Which insurances are now mandatory if you are active in the construction industry and what should you definitely pay attention to?

On 1 July 2019, the Peeters-Ducarme Act came into force. It supplements the Peeters-Borsus Act, which came into force exactly one year earlier, and brings greater equality to the insurance obligations of the various construction parties.

What was the situation like after the introduction of the Peeters-Borsus Act on 1 July 2018?

Contractors, architects and other service providers in the construction industry are liable for stability-threatening defects and watertightness problems for up to ten years after the completion of a structure if they can be linked to its stability or soundness. Since 1 July 2018, the Peeters-Borsus Act requires them to insure that ten-year liability. However, that legislation includes many restrictions :

  • The insurance obligation is only imposed on contractors, subcontractors, architects and other service providers (including their agents and employees) who carry out building shell activities or who provide intellectual services with regard to these building activities.
  • The law only applies to dwellings located in Belgium that are mainly (more than 50%) intended for habitation by a family or a single person. Collective residential buildings in which at least one accommodation or sanitary block is shared or used by persons without a family connection fall outside the scope.
  • The insurance obligation only applies to housing projects for which the final building permit was issued from 1 July 2018 and for which the intervention of an architect is required by law.
  • Liability insurance is limited to damages that affect the stability or soundness of the dwelling, or watertightness if it affects stability or soundness.

The Peeters-Borsus Act does not impose an insurance obligation for damage occurring prior to the completion, nor for minor defects. However, statistics show that such damages are the most frequent. There are consequently still major gaps in the protection of the commissioning authority following the introduction of the Peeters-Borsus Act: the signal for the government to create more comprehensive legislation. That resulted in the Peeters-Ducarme Act or the ‘Act on mandatory Professional Liability Insurance for intellectual professions’, which came into effect on 1 July 2019.

What is the situation after the introduction of the Peeters-Ducarme Act on 1 July 2019?

The Peeters-Ducarme Act extends the compulsory Professional Liability Insurance for building contractors. Anyone practising an intellectual property profession in the construction sector is henceforth obliged to take out insurance for their contractual and extra-contractual professional liability for all construction projects in Belgium. Such Professional Liability Insurance for intellectual professions in the construction sector covers their liability for faults made during the exercise of their profession, with the exception of the ten-year liability for stability-related faults referred to in Articles 1792 and 2270 of the Civil Code.

The intellectual professions in the construction sector include architects, engineers, engineering consultants, surveyors, safety and health coordinators, environmental experts, landscape architects, urban planners, energy experts, auditors, project managers, quantity surveyors and interior designers.

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A few more key aspects concerning mandatory third party liability insurance in the construction sector

The Laruelle Act was replaced on 1 July 2018 by the Peeters-Borsus Act. The Laruelle Act made it mandatory since 2007 for architects* to obtain professional liability insurance. However, the Peeters-Borsus Act only related to the ten year liability for private housing construction projects which require the involvement of an architect. Specific stipulations concerning professional liability insurance had to wait for the supplementary law. The Peeters-Ducarme Act only partially addresses this shortcoming: henceforth architects must insure both their ten year liability for private housing projects (Peeters-Borsus Act) and their general professional liability (Peeters-Ducarme Act). However, the legislator has ‘omitted’ to include ten year liability linked to projects that are not private endeavours. Our policies always cover this to ensure that you, the architect, are never confronted with unpleasant surprises.

  • Contractors** execute material operations and consequently do not perform an intellectual profession. That is why they do not fall within the scope of the Peeters-Ducarme Act and are not obliged to take out mandatory professional liability insurance.
  • Property developers*** are specifically excluded in the Peeters-Borsus and Peeters-Ducarme Acts. They are not obliged to take out professional or ten year liability insurance. However, it is often the developer who is approached in the event of a claim – both during the construction phase and following provisional delivery. Moreover, in 98% of cases it appears that this target group is uninsured or inappropriately insured. Property developers consequently need to carefully consider their risks and insurance cover.
  • Surveyor-experts and safety coordinators**** were already legally obliged to obtain insurance cover on the basis of the Royal Decrees dated 15 December 2005 and 25 January 2001. The new law introduces several changes for them. For example, the legal warranties need to be amended and cover needs to be provided for 36 months if surveyors and safety coordinators cease their activities.
  • Both laws do not in any way affect the liability rules. Construction parties who are liable for the stability of a structure are still advised to obtain appropriate insurance cover, even though it is not a legal requirement. After all, if a party is held liable for a fault that threatens the stability and they are not insured for this, they will be held liable for any associated costs.
  • Any contracts and invoices associated with a construction project must henceforth indicate the name and company registration number of the insurance provider and the policy number of the liability insurance.
  • In accordance with Article 9 of the Peeters Act urban development experts***** who perform their activities as a civil servant for the Nation State, a Region, a Community or the Regie der Gebouwen (Belgian Buildings Agency) do not require insurance cover providing their liability, including the 10 year liability, is covered by the Nation State (i.e. also the City), the Region, the Community or the Regie der Gebouwen. The Ducarme Act (Column 4) also applies this rule to this category in accordance with article 9 of the Ducarme Act (Belgian Official Gazette 26 June 2019).
  • What about a number of technical trades/professions with respect to the Peeters Act? HVAC (heating, air conditioning, etc.), home automation, acoustics, sanitary facilities, drains, lifts, electricity and insulation techniques (not embedded in first fixing work) are according to the legislative text not within the scope of the Peeters Act. However, the above mentioned activities can obviously have an impact on the stability of an enclosed shell structure and cause significant material damage, e.g. as a result of channels cut into concrete support beams. This in itself should not present a problem with decennial damage whereby one of these parties could potentially be liable. In fact, our global ten year liability policies in accordance with the Peeters Act automatically include cover for all construction stakeholders!

Would you like further information?

Philippe De Brabanter, our construction insurance expert, would be happy to assist and deal with any questions you may have. He can be contacted via bouw@vandessel.be or by calling 03 420 84 30. If you would like to know more about our total solution for companies operating in the construction sector, please refer to VD Construct Solutions.

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