Key Update to the Technical Requirements Schedule Continues to Expand Coverage for Water Ingress Claims

Pro-Demnity is pleased to announce a new route for Ontario architects to secure professional liability coverage for Ingress of Precipitation (Water Ingress) where their designs include Insulated Metal Panels (IMPs) for use in above-grade exterior walls.

The information that follows is in two parts. Part 1. applies to the specific provisions applying to IMPs, Part 2. describes related updates to other provisions in the Technical Requirements Schedule.

PART 1 – Introducing Part D of Technical Requirements Schedule

Background

Since the introduction of the OAA’s “Wall Design Exclusion” (c.2005) and the subsequent “Non-Drained Exterior Wall Exclusion” (c.2010), Ontario architects have not had liability coverage for Ingress of Precipitation (Water Ingress) for designs incorporating Insulated Metal Panels (IMPs) unless the IMPs are used in a drained or rainscreen exterior above-grade wall system.

In early 2024, Pro-Demnity brought the Non-Drained Exterior Wall Exclusion—formerly an Endorsement added to every Policy—into the Policy wording as Exclusion 21. This exclusion includes the same list of exempted assemblies that appeared in the former Non-Drained Exterior Wall Exclusion with several clarifications:

• A new Part B of the Technical Requirements Schedule provides architects with an additional, optional route to achieving liability coverage for ingress of precipitation for designs incorporating precast concrete panels.

• Part C of the Technical Requirements Schedule is an updated version of the former Window Wall Endorsement.

However, neither the original Non-Drained Exterior Wall Exclusion nor the Technical Requirements Schedule included any specific provision for coverage for ingress of precipitation/ water ingress for IMPs.

In late 2024, Pro-Demnity began consideration of modifications to the Technical Requirements Schedule that would provide a route to liability coverage for ingress of precipitation coverage for architects using IMPs in their designs.

Pro-Demnity is pleased to announce a new Part D to the Technical Requirements Schedule that provides an optional, additional Quality Assurance/ Quality Control (QA/QC) procedure for architects to secure liability coverage for ingress of precipitation where IMPs are used.

Pro-Demnity thanks the Metal Contractors Association, Canadian IMP manufacturers, building envelope specialists, and several architects with extensive experience using IMPs on their projects for their valuable contributions to this work.

Implementation

Once these amendments have been formally incorporated into the TRS wording, they will come into effect at each architect’s next renewal date. However, where such amendments do not negatively impact the architect’s coverage, or where they serve to broaden coverage, they will take effect immediately and can be applied retroactively (in favour of the architect) respecting any coverage determination related to a claim involving ingress of precipitation/ water ingress.

New Technical Requirements Schedule: Part D – Insulated Metal Panels (IMP Systems or IMPs)

Summary of Key Features:

The new Part D of the Technical Requirements Schedule dealing with IMPs closely follows the approach taken in Parts B – Architectural Precast Concrete Panels, and Part C – Window Wall Fenestration Systems.

• Insulated Metal Panels (IMPs) are defined.
• The provisions apply ONLY to exterior above-grade walls, not to roof systems.
• Identification of required details for the IMP System and interfaces with adjoining assemblies.
• Requirement that an “Independent Building Envelope Consultant” (IBEC) is to be a member of the design team, with identification of the roles and responsibilities of the IBEC.
• Provision of required Shop Drawings for the IMP System.
• Provision of IMP Manufacturer’s Installation Instructions.
• Adherence to applicable Standards: CSA A440.6.20 High Exposure Fenestration Installation, ASTM C1193-16 Standard Guide for use of Joint Sealants and CSA S478-19 Durability in Buildings.
• Submission of a QA/QC procedure by the Contractor.
• Provisions regarding initial IMP System installations serving as a field “mock-up.”
• Successful testing of a representative sample “in situ.”
• Provision of a Maintenance Manual for the IMP System.
• Provision of a required five-year warranty by the IMP System installer/Contractor respecting water ingress beyond the inner seals during the warranty period.

PART 2 – Additional Clarifications to the Technical Requirements Schedule

Part D generated the need for several amendments to the Definitions and Interpretations section of the Technical Requirements Schedule in order to properly incorporate this new liability coverage for IMPs into the overall Schedule. In addition, inconsistencies were found in existing wordings of Part B and Part C. which have been rectified. These are described below.

Amendments to Technical Requirements Schedule – Definitions and Interpretation Section

Amendments to existing definition: – changes in bold

“IBEC”

• amend Item vi) i. to read: “has demonstrated experience with the use of Precast Concrete Wall Systems, Window Wall Systems and/or Insulated Metal Panel Systems respectively;”

• amend Item vi) iv. C to read:  “independent documentation of their provision of recommendations and review of Your design within the meaning of clauses B., b) i) and ii), C., b) i) and ii) and D., e) i) and ii) above, is maintained in this schedule

Addition of new Definition:

“Insulated Metal Panels (IMPs)” means prefabricated plant-manufactured composite exterior wall panels incorporating:

• an impervious metal exterior layer,
• an insulation layer
• an impervious metal interior layer
• pre-formed interlocking tongue-and-groove formed joints using two-stage drained and vented joint technology,
• with seals within the formed joints between the IMP panels.

Amendments:  Part B. – Architectural Precast Concrete Systems – amendments underlined or in bold

• References to Precast Concrete Assembly or Assemblies throughout Part B will change to Precast Concrete System or Systems – terminology that is consistent with the NBC and provincial and territorial building codes. Part C. and Part D. of the Technical Requirements Schedule already refer to Window Wall Systems and Insulated Metal Panel Systems.

• Item B. d): Correction of a typo in the reference to ASTM C1193.

• Item B. e): Addition of the words “or equivalent provided by the Precast/Prestressed Concrete Institute (PCI),” after the reference to the “CPCQA Canadian Precast Concrete Quality Assurance Program.”

• Item B. l): Addition of the word “designed,” as in “designed, constructed and installed . . . etc.” in the warranty requirement description—consistent with the existing wording in both Part C. – Window Wall Systems, and new Part D. – Insulated Metal Panels (IMPs).

Amendment:  Part C. – Window Wall Systems – amendments underlined or in bold

In response to advice from architects, respecting the challenges of obtaining a 5-year provided by the Window Wall manufacturer, Pro-Demnity has deleted the words “by the Window Wall manufacturer” from Part C.- g) and added a final sentence: “The warranty must be transferable to subsequent owners of the building.”

The requirement for provision of a 5-year warranty (or warranties) coverage for Ingress of Precipitation—aka Water Ingress—remains. However, how the required warranty (warranties) covering the “entire Window Wall System as designed, constructed, and installed, including transitions and seals to adjoining assemblies and materials  . . . etc.” is to be achieved is left to the architect and their client to determine and specify.

As noted, this is a broadening of coverage and will be applied retroactively (in favour of the architect).

General Disclaimer

The contents of this page and any other published material from Pro-Demnity offer information for general informational purposes only. The material presented does not modify the standard of care for architects in Ontario and does not alter the Pro-Demnity policy provisions. The information is by necessity generalized and an abridged account of the matters described. It should in no way be construed as legal, technical or insurance advice and should not be relied on as such. Readers are cautioned to consult with their own legal or professional advisors for specific questions and to conduct their own due diligence, as accuracy of referenced material is not guaranteed. This web page should not be reproduced in whole or in part in any form or by any means without written permission of Pro-Demnity Insurance Company. Please contact mail@prodemnity.com.

Effective April 1, 2025, upon renewal, premiums will include an Experience Rating Factor (ERF) which will drive discounts or surcharges, based on a rolling 10-year period of claims. This helpful FAQ provides additional context for understanding the Experience Rating Factor and the impact to professional liability insurance premiums.

Pro-Demnity is making an important update to our pricing model for annual practice professional liability insurance. It aims to reward positive risk-awareness habits within the architectural community.  

Claims experience will be reflected in premiums  

This is a notable response to the majority of architectural firms who have been claims-free, or who have had a small number of claims over the firm’s lifetime. Upholding fairness and integrity remain central to the reliability of our pricing model, and support policyholders’ calls for premiums that are priced in accordance with their claims history. Premiums will reflect discounts or surcharges, based on a rolling 10-year period of claims.

The Experience Rating Factor (ERF) 

Effective April 1, 2025, upon renewal, the premium calculation formula for annual practice professional liability insurance, takes into consideration the architectural practice’s history of claims severity – not frequency – with the inclusion of an Experience Rating Factor (ERF) as a new input to the existing formula. 

ERF determines if a firm receives a discount or a surcharge on premium 

• ERF is based upon the individual policyholder’s ten-year loss ratio compared with Pro-Demnity’s ten-year loss ratio. Depending on the relative loss ratio, the Base Premium will be adjusted between -3% (discount) to up to +7% (surcharge). 

• ERF is reflective of claim costs (paid expenses, or paid damages, or both) based on severity and NOT the number of claims reported or actioned. Any paid claims less than $15,000 CAD are excluded when calculating the architectural firm’s loss ratio.  

• Annually, the rolling ten-year loss ratio period will not consider the two newest years’ loss ratios. For example, in the upcoming renewal year (effective upon renewal as of April 1, 2025), the ten-year timeframe that will be used is 2013-2022 with the claims incurred losses as of December 31, 2024, for that period. This is because the first two years of a new claim can be unpredictable, with natural and significant fluctuations in reserves. From a business planning perspective, this provides architectural practices with advance time (up to 2 years from the first notice of loss) to plan and prepare for potential future surcharges in their premiums, of up to 7%. 

Experience Rating Factor is being integrated into the existing Premium Calculation Formula  

Premium is based upon five factors: 

• the most recent 3-year average reported fees;  

• Coverage tier based on fees. Remember that fees over $499,999 and/or over $1M are automatically priced in accordance with the higher mandatory claim, project and aggregate limits as per the Architects’ Act;

• the same relative adjustments for deductibles, limits, etc., that will continue to apply; 

• the annual rate, which is applied equitably to all architectural practices and varies annually from 1% to 5%. From April 1, 2024 through to March 31, 2025, the applicable rate increase is 3%. The planned rate increase from April 1, 2025 through to March 31, 2026 is 4%; and

• The new Experience Rating Factor, effective upon renewal, starting April 1, 2025

The Claims Expense Contribution (CEC) 

Policyholders who are currently subject to the Claims Expense Contribution (CEC), will remain in this program for the foreseeable future. The CEC is a deductible that was introduced in late 2019, as a means of recovering claims costs from a small handful of firms whose loss ratios significantly exceeded their premiums due to frequent and severe claims. These firms are expected to pay their CEC invoices when they are issued. For firms who have paid a CEC, their ERF will be adjusted accordingly within the premium calculation to bring them into an equitable standing.

Starting April 1, 2025, the CEC will be discontinued for any new claims, as the Experience Rating Factor (ERF) within the Premium Calculation Model will ensure that premiums are always higher for those firms with severe claims.

Reporting Claims

While claims cannot be altogether avoided – and there is plenty that can be done by an architectural practice to mitigate and manage risks – we continue to remind policyholders of their obligation to notify Pro-Demnity of potential claims so that we may act immediately to defend and protect your firm from any allegations of error, omission or negligence. Our early intervention is effective in minimizing the overall costs of claims and provides our claims team with greater advocacy opportunities to protect and defend your firm.

Experience Factor Rating is outlined in your Renewal documentation 

With your renewal, on or after April 1, 2025, an Experience Rating Factor Statement for your firm will be included. The ERF will be integrated into and reflected within your invoice total. 

Commitment to Mandate 

Pro-Demnity is committed to providing high-quality professional liability insurance solutions at the best possible premium for architects. We understand architectural risk, and premiums reflect the realities and potential risks of running and maintaining an architectural practice. 

• Financial Stability: To fulfil our mandate to the profession, and the public, we must retain sufficient capital as per our regulator, the Financial Services Regulatory Authority. Capital is generated through premiums, investments, and cost/expense containment. Ensuring our viability and sustainability today, and into the future, is paramount for the profession. A useful read is the 2025 Annual Update: Protecting Architects is Our Policy.

• Stable Rate Increases: Regardless of claims experience, an annual rate increase is equitably applied to all policyholders. Practices are encouraged to budget annually for rate increases and plan their forecasting around a 5% rate increase every year, regardless of whether a discount or a surcharge will apply in any given renewal period. 

Comprehensive Coverage 

In addition to reflecting architectural practice risks, your premium also includes valuable benefits and access to helpful resources to help you understand risks and minimize claims exposures. You are encouraged to make the most of all the resources available to you, whether you have experienced a claim or not. 

Finally, we remain committed to ensuring that our policies continue to reflect the principles of equitability and integrity, fostering a fair and transparent environment for all our valued clients. 

We are here to support you as your ally and ensure you have the best possible coverage. 

Additional information

• Frequently Asked Questions
• Simple illustration of the premium calculation that includes the Experience Rating Factor

Clarifications to Exclusions for Retention of Surveyors, Geotechnical and Pollution (Hazardous Substances) Specialists

The updated Pro-Demnity policy wording that has or will come into effect at each Ontario architect’s annual renewal on or after April 1, 2024, re-affirms that the provision of services provided by any of Surveyors, Geotechnical and Pollution (Hazardous Substances) specialists is excluded from coverage. 

It also includes an important clarification that engaging or retaining these types of specialists on behalf of a client is also excluded from coverage.

The February 1, 2024, Pro-Demnity Notice about the Refreshed Policy Wording includes the following:
Clarification of coverage related to Geotechnical engineering and Surveying Services.  
 
The performance or engagement of geotechnical engineering services or services that constitute the practice of cadastral and professional surveying under the Surveyors Act, are not covered. This reinforces our current practice and policy wording [Exclusions: What is Not Covered. Item 17]. Further, the performance or engagement of professional services related to “pollution” are also excluded. [Exclusions: What is Not Covered. Item 18]

Review the entire February 1, 2024, Notice about the Refreshed Policy Wordings.

CLIENTS ARE RESPONSIBLE FOR PROVIDING THIS INFORMATION

Surveyors, Geotechnical Engineers and Hazardous Substances (Pollution) specialists provide critical information to an architect and its subconsultants about the existing condition of a client’s property. However, architects are reminded that supply of this information and engagement of those who are qualified to provide it must remain the client’s responsibility.

It is also important that an architect be entitled to rely upon the information provided by a client or these specialists as the foundation for its own services and the services of any subconsultants retained by the architect to assist with the design.

Recently updated OAA Practice Tip PT.30 reminds architects that the OAA continues to recommend against architects retaining any of these three types of “Owners Specialists”.

In fact, with Pro-Demnity’s Refreshed Policy Wordings, to do otherwise is simply not covered by your insurance.

STANDARD FORMS OF CLIENT / ARCHITECT AGREEMENT WORK FOR YOU

Consistent with Pro-Demnity’s and the OAA’s positions, standard forms of Client / Architect Agreement provided by the OAA and RAIC require the Client to supply information provided by Surveyors, Geotechnical and Hazardous or Toxic Substances (Pollution) specialists to the Architect and, where necessary, for the Client to retain any of these specialists in order that it can supply the necessary information.

And, very importantly, the standard forms of contract with a client provided and endorsed by the architectural profession provide that the architect is entitled to rely upon the information about the existing property provided by the client and these specialists.

Standard forms of contracts between a Consulting Engineer and a client endorsed by the engineering profession in Canada include similar provisions respecting the client’s responsibility to provide information to the professional as requested by the consultant.

PROFESSIONAL LIABILITY INSURANCE COVERAGE IMPLICATIONS

The updated Pro-Demnity policy wording has or will come into effect at each architect’s renewal on or after April 1, 2024. This Bulletin highlights applicable clarifications to exclusions impacting coverage where an architect opts to retain these specialists on behalf of the client / owner.

POLICY WORDINGS – RELEVANT EXCLUSIONS FROM COVERAGE INCLUDE:

Exclusion 9  –   Performance of Services NOT Usual and Customary
Exclusion 17 – Geotechnical Engineering and Surveying Services
Exclusion 18 – Pollution
A related exclusion that may apply in circumstances where an architect agrees to retain any of these specialists is also included in this Bulletin:
Exclusion 27 – Waiver of Insurer’s Right of Recovery.
The impact of each of these exclusions is discussed in more detail in this Bulletin.

EXCLUSION 9 – PERFORMANCE OR ENGAGEMENT OF SERVICES NOT USUAL AND CUSTOMARY FOR AN ARCHITECT

Provision or engagement of the services provided by a surveyor, or specialists providing geotechnical investigations or pollution (hazardous materials) investigations and mitigation services fall outside what are considered Usual and Customary services of an architect. These “Owner’s Specialists” should be retained by the client or owner of the project. This position has not unchanged, notwithstanding the apparent enthusiasm of some client’s procurement personnel to transfer their responsibilities onto the architect or a “Prime Consultant” – presumably to save themselves some work or transfer owner’s risk related to their property onto others.

Exclusion 9 excludes coverage for:

The performance of services not Usual and Customary for holders of a Certificate of Practice (i.e. architectural practices), or Architects OAA (members of the Association) or holders of certificates of authorization under the Professional Engineers Act (i.e. professional engineering practices).

Where the architect retains a subconsultant to provide services, the architect usually acquires contractual or vicarious liability for the subconsultant’s services to the client with whom the architect has a contract. If an engineer or other subconsultant makes an error that causes damages to the client, it is the architect who will typically be sued by the client in contract even if the architect played no role in the error or negligence involved.

The architect can try to recover any damages assessed against it from the subconsultant; however, its ability to do so may be hampered by several factors including the availability of adequate insurance covering the engineer and sub-contract provisions related to the subconsultant’s services that are prejudicial to the architect.

The same applies to surveyors, and specialists providing geotechnical investigations or pollution (hazardous materials) investigations and mitigation services retained by an architect. Since engagement of these specific specialists is NOT a Usual and Customary professional responsibility of an architect, Claims related to provision, or engagement of these services would already be excluded from the architect’s PLI coverage on that basis – even if the following specific exclusions were not included in the policy.

EXCLUSION 17 – GEOTECHNICAL AND SURVEYING SERVICES

The updated Pro-Demnity policy wording, Exclusions 17 – Geotechnical Engineering and Surveying Services includes a clarification that BOTH the performance or engagement of these specialized services by an insured Ontario architect are excluded from coverage (underling for emphasis).
Excluded from coverage are:

17.    Geotechnical Engineering and Surveying Services. The performance or engagement of geotechnical engineering services or services that constitute the practice of cadastral and professional surveying under the Surveyors Act, by the Named Insured.

This means that where an architect has retained any of surveyors, geotechnical investigations or pollution (hazardous substances) investigations and mitigation services on behalf of a client or property owner, a claim against the architect related to the failures, errors, omissions or negligence of any of these specialists will be excluded from the architect’s PLI coverage.

Pro-Demnity will NOT provide a defence or pay damages assessed against the architect related to such claims made against the architect.

WHAT ARE THE IMPLICATIONS FOR AN ARCHITECT WHO AGREES TO RETAIN THESE SPECIALISTS?

If an architect engaged any of these specialists and was named in an action related to the specialist’s negligence – presumably because the architect had assumed “contractual” or “vicarious” liability for the work of the specialist as a subconsultant – the architect would need to retain its own lawyer to manage its legal defence including claiming-over against the specialist with whom the architect has a contract.  This would be at the architect’s own cost and risk.

WHAT ARE THE IMPLICATIONS FOR A CLIENT?

When a client insists that the architect retain these specialists it is in effect, “shooting itself in the foot” – eliminating one avenue for the client’ to pursue a claim against the specialist, since it would not be able to sue the specialist directly in contract. Furthermore, they receive no benefit as whatever PLI limits the architect maintains, or the client requires the architect to maintain, will NOT be available to contribute to any damages assessed against the architect because of Exclusion 17.

EXCLUSION 18 – POLLUTION

Exclusion 18 – Pollution, paragraph 18 a) clarifies that both the performance or engagement of professional services related to pollution investigation or mitigation are excluded from coverage (underling for emphasis).

Excluded from coverage are:
… the discovery, presence, handling, removal, or disposal of or exposure of persons or property to Pollution in any form, on, in or under lands, into waterways, sewage or drainage systems, Pro-Demnity Insurance Company Professional Liability Insurance Policy PD.FORM 1F/24 Page 23 of 40 or into the atmosphere. Any injury or damage arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of Pollution, or any Claim arising out of any request, demand, order, claim or proceeding to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to or assess the effects of Pollution. This exclusion applies regardless of whether or not the Pollution was accidental, expected, gradual, intended, preventable or sudden.

“Pollution” is defined in the Pro-Demnity policy as:
Pollution means any actual, alleged or threatened emission, release, discharge, dispersal, seepage, migration, escape or disposal of any solid, liquid, gaseous or thermal irritant or contaminant, including (without limitation) smoke, vapour, odours, soot, fumes, acids, alkalis, chemicals, and waste. Waste includes materials to be recycled, reconditioned or reclaimed. Pollution also includes (without limitation) any substance or contaminant prohibited or restricted under the Environmental Protection Act, R.S.O. 1990, c.E.19, any of the regulations prescribed therein or any other applicable federal or provincial environmental legislation.

This definition of “Pollution” is very broad, including an array of toxic or hazardous substances that may be present at properties owned by a client.

Exclusion 18 – Pollution, Paragraph 18 b) describes limited coverage that may be available where a Claim relates to asbestos or polychlorinated biphenyl (PCB). Elsewhere in the policy there is a Sub-Limit for Pollution claims as follows:

7.          With respect to the limited coverage extended under the exclusion for Pollution, the maximum limits We (Pro-Demnity) will pay under the exception in section 18(b) are as follows:
a) Claim Limit: $250,000 per Claim;
b) Project Limit: $500,000 maximum for all Claims related to a single project; and
c) Annual Aggregate Limit: $1,000,000 maximum for all Claims reported in the Period of Insurance.

WHAT ARE THE IMPLICATIONS FOR A CLIENT?

When a client insists that the architect retain a Pollution or Hazardous or Toxic Substances specialist, it is prejudicing its own ability to recover damages from the specialist, since it would not be able to sue the specialist directly in contract.

The Professional Liability Insurance claim limits the architect maintains, or the client requires the architect to maintain beyond the minimums noted in a), b) and c) above for claims related to asbestos or polychlorinated biphenyl, will NOT be available to contribute to any damages assessed against the architect. Both the architect and the client stand to lose.

EXCLUSION 27 – WAIVER OF INSURER’S RIGHT OF RECOVERY

Pay attention to your Subconsultant Contracts!

Exclusion 27. of the updated Pro-Demnity policy excludes coverage for the architect where it has given an indemnity, limitation, waiver or undertaking to not enforce any rights for the benefit of an engineer or other specialist subconsultant:

27.      Waiver of Insurer’s Right of Recovery.
We will not cover You, pay Damages or provide You with a defence or make supplementary payments for Claim(s) made against You where You have entered into any agreement or given a waiver or provided an undertaking not to enforce any rights, that may prohibit, restrict, postpone, or imperil Our right of recovery against any other person.

Many engineer-authored agreements with a client often include a limitation on the engineer’s liability to its client to a dollar amount that is far less that the available claim limit provided by its professional liability insurance…perhaps limited to fees paid to the engineer or a specified amount that is clearly inadequate.  

And today, the mandatory minimum professional liability insurance claim limits to be maintained by consulting engineers in Ontario, regardless of size of practice and scale of projects are $250,000 per claim, $500,000 in the aggregate.

Where an architect retains the engineer – or any other specialist consultant – as its subconsultant, the architect becomes the engineer’s client and may find that it has agreed to provide an indemnity or waiver of liability to the engineer…meaning the architect will be partially or fully liable to their own client or others for the engineer’s errors, omissions or negligence respecting the engineer’s services.

Provision of such an indemnity, waiver or acceptance of inadequate financial exposure of an engineer or other specialist should never be agreed to by the architect. Unfortunately, too many architects appear to not pay sufficient attention to the contents of the agreements they have with their subconsultants. That neglect may prove costly for the architect when it triggers Exclusion 27. in the Pro-Demnity policy.

ARCHITECTS’ RISK MANAGEMENT TOOLS

Accepting contractual liability for a wide array of specialists under the guise of “Prime Consultant” exposes the architect to contractual liability for a much broader array of services than it may recognize or be comfortable assuming. However, some architects may consider agreeing to a client’s wishes, in order to secure a commission or in the belief that “It can’t happen to me.”

Pro-Demnity cannot endorse such a decision and reiterates that such decision is likely to jeopardize your own insurance coverage. But if you do agree to retain any of these specialists at a client’s request or engagement requirement, the following risk management advice may prove valuable:

Use standard forms of Client / Architect Agreements such as OAA Document 600-2021 that include provision of surveys, geotechnical investigations, toxic or hazardous substances, air and water pollution tests and a legal description of the site as a Client Responsibility – Article A12 – Items 12.1, 12.2, 12.3, 12.4 & 12.5, and GC 05 Client Responsibilities – GC 5.3.6 and GC 5.3.7
and
Include a limitation on the contractual liability assumed by the architect retaining any specialist subconsultant identified as the Client’s responsibility in the standard form of contract.
OAA Document 600 – 2021 General Condition GC09 – GC 9.3.1 & GC9.3.2 and GC 9.7)
Insist that the Client / Owner indemnify you / your practice respecting the contractual or vicarious liability you will assume by retaining any specialists required to provide necessary information about the client’s property and the existing conditions of the property…including surveyors, geotechnical investigations, toxic or hazardous substances and / or pollution identification and mitigation. This protection for the architect retaining these specialists on the client’s behalf is consistent with a client / professional relationship and is reflected in OAA standard forms of contract such as:
OAA Document 600-2021, Articles A 11.2 and A12, and GC Client’s Responsibilities, GC 5.3.6
or
OAA Document 800-2021 Articles A08.2 & A09, GC02 – Client’s Responsibilities GC 2.1.2, and GC05 – Indemnification and Liability of the Architect GC5.1 & GC5.2.7,

Do not accept a fee proposal or agree to a subconsultant contract with any engineer or specialist that includes a clause limiting the liability of the subconsultant, or any indemnification in favor of the subconsultant that is not also included in your own contract / agreement with your client – the project owner.

Insist that any subconsultant, including Surveyor, Geotechnical or Pollution (Hazardous Substances) specialists you retain or recommend to a client, carry professional liability insurance with per claim and aggregate limits that meet or exceed those carried by or required for the architect.

Since engagement of these specialists is excluded from your PLI coverage, the specialist’s own PLI and adequate contract protections are the only things standing between yourself and contractual liability for financial damages caused by these specialists if you engage any of them as subconsultants.

Recognize and understand the significance of key features in the engineer’s or specialist’s professional liability policy including whether:

• the aggregate limit is a MULTIPLE of the claim limits, and
• defence costs are IN ADDITION to the claim limits.

Where these features are NOT provided in the engineer’s or specialist’s policy, insist upon higher claim limits to compensate.

Recognize that insurers, including Pro-Demnity, DO NOT define architectural practice or determine what are the Usual and Customary services of the profession. That is determined by legislation and the profession itself. Architects should govern themselves accordingly, so they do not find they are providing services outside the Usual and Customary test.

Importantly, client purchasing departments and client preferences DO NOT determine what qualifies as Usual and Customary services of an architect that will be covered by PLI. To address this consideration, in the instances that are the subject of this article, Pro-Demnity has clarified coverage concerns with specific exclusions in the policy.

Be sure that you meet your obligation to advise / warn your client about the negative implications of their requirements. Specifically, make sure that you advise your client of the applicable exclusions from your PLI coverage in writing.

Obtain legal advice before you agree to engage any of these specialists.

IMPORTANT INFORMATION

Architects who have questions about the content of this Bulletin, or about the engagement of any other Specialists that may fall outside the Usual and Customary services of an architect, are encouraged to contact Pro-Demnity’s Risk Services advisors to review the circumstances.  

Pro-Demnity’s Risk Services advisors are also available to review any other insurance questions or concerns, or for risk management advice on other topics.

This advisory is for information only. It is NOT a legal opinion and cannot be relied upon as assurance of coverage in any particular circumstance. Review any coverage questions impacting your own practice with your lawyer. Coverage is determined in accordance with the Certificate of Insurance, policy wording and any endorsements in force at the time a Claim arises. Coverage decisions can only be made at the time a Claim arises, based on the allegations and then known circumstances. Policies issued by different or excess insurers may have different policy wordings.

New Sub-Limit on Damages and Defence Costs

If an architect agrees to mandatory arbitration in a contract with a client, it will trigger a new sub-limit on coverage for BOTH damages and claims expenses.

The imposition of the sub-limit can have serious financial consequences for the architect.

Dispute Resolution provisions included in a Client / Architect contract may seriously impact or negate the architect’s professional liability insurance coverage. Owners are frequently requesting architects to agree to dispute resolution provisions that require the architect to participate in any arbitration between the Owner and any other party or participate in a dispute resolution process as determined by the Owner / Client. A new sub-limit incorporated into the Pro-Demnity policy addresses the serious financial consequences faced by Pro-Demnity where architects agree to such provisions.

Please familiarize your self with the following. Your practice’s financial viability may depend upon it.

The Problem: Mandatory dispute resolution clauses hurt architects.

For many years, Pro-Demnity has been advising Ontario architects about the negative implications where an architect agrees to a client-authored contract provision that has the architect agreeing to participate in a Dispute Resolution process dictated by the client. Pro-Demnity’s advice and request has consistently been: “Please do not agree to these provisions!”

Unfortunately, too many architects ignored this advice, possibly because there was no apparent consequence for the architect who ignored Pro-Demnity’s guidance and went along with the client’s contract terms instead.

The financial burden from these architects’ decisions has fallen onto Pro-Demnity in its role providing and managing a defence to these architects when claims have arisen on projects where the architects have ignored Pro-Demnity’s advice. The added costs incurred by Pro-Demnity are in turn being distributed amongst every Ontario architect that has not agreed to such provisions.

The situation has become unsustainable. In the last few years, there have been several claims where Pro-Demnity’s ability to manage a defence for the architect has been prejudiced by the architect’s having agreed to participate in a binding arbitration in their contract with a client. These have generated extraordinary defence costs, including one current situation where defence costs are approaching $5,000,000 (!) without a resolution in sight.

It was determined that architects who ignore Pro-Demnity’s advice respecting arbitration should face a financial consequence – hopefully significant enough to convince architects (and their clients) to re-think their attachment to binding arbitration as a contract requirement. It is expected that this will help maintain a more equitable distribution of risk amongst all architects, as the increased costs of providing coverage for arbitrations agreed to by some affects everyone’s premiums.

What has Changed?

On February 1, 2024, Pro-Demnity advised architects of the updated, “refreshed” Pro-Demnity policy that would come into effect at each firm’s next renewal on or after April 1, 2024.

One important change to coverage that was highlighted was the institution of a new sub-limit on BOTH defence costs AND damages payable by Pro-Demnity on a claim where the architect has agreed to participate in a mandatory arbitration or other dispute resolution process dictated by the client.

Quoting from the February 1, 2024 Bulletin, we draw your attention to the following instances where coverage language is more explicit in the refreshed policy:

Addition of a new sub-limit in cases where Mandatory arbitration is required in a contract: 
“If You have agreed, in a contract for professional services, to a mandatory arbitration or other type of dispute resolution clause that removes or restricts Our ability to defend You, and there is a Claim made that relates to such contract, the maximum amount of all Damages and Claims Expenses that we will pay on Your behalf or reimburse to You shall not exceed $50,000 for one Claim and $100,000 for all Claim(s) reported during the Period Of Insurance”.  

This sub-limit will take effect for contracts signed on or after July 1, 2024. It is intended to encourage Certificate of Practice policyholders to pay particular attention to Dispute Resolution clauses in contracts which erode protections from Pro-Demnity that would otherwise be yours. [How much We will pay: Our limit(s) of Liability and Your Deductible. Important Sub-Limits and Reductions to Limits of Liability. Item 6]

What Does this Mean for Your Practice?

Regardless of the claim limits the architect may purchase for its practice or the higher limits that a client may require as a condition of engaging the architect, if the architect has agreed to participate in binding arbitration, or any other dispute resolution provisions in a contract that prejudices Pro-Demnity’s ability to deliver or manage the defence that the insured architect would be entitled to, the MAXIMUM amount Pro-Demnity will pay for BOTH claims expenses AND damages is the new sub-limit of $50,000 for one claim, and $100,000 for all claims in the (annual) Period of Insurance.

The excerpt from the February 1, 2024 bulletin is clear. The intent is to encourage architects to pay close attention to any dispute resolution provisions in any contract that is presented to them. It provides a significant consequence for architects who don’t take Pro-Demnity’s advice respecting arbitration seriously, and an incentive for clients to reconsider their – and their lawyers’ – enthusiasm for writing such provisions.

We strongly recommend that every architectural practice ensure that any member of the firm who has the authority to enter into a contract with a client is made aware of the new sub-limit and the financial consequences for the practice if the issue is ignored. Refusal to accept such provisions in a contract should be adopted as a prudent business requirement by every Ontario architectural practice.

Four Things You Can Do to Avoid the Sub-Limit and Protect your Coverage:

1. Insist that any client-authored dispute resolution provision DOES NOT commit the architect – and by extension, Pro-Demnity – to participate in any form of client-directed dispute resolution process. If you are unsure of the impact of a client-authored dispute resolution process, refer it to your own lawyer and / or Pro-Demnity’s risk services team.
2. Ensure that if arbitration is included as a dispute resolution option in any contract with a client (or a sub-consultant), the use of arbitration must be by mutual consent of all the parties to the dispute.
3. Replace any client-authored dispute resolution provisions with ones that will not tie Pro-Demnity’s hands and trigger the sub-limit. A suitable example is the wording in OAA Document 600-2021A, GC 16 – DISPUTE RESOLUTION, items 16.1 through 16.8.

   Particularly important in this context are Items 16.4, 16.5 and 16.6. These should NOT be altered.

4. Delete or abandon any Dispute Resolution provisions in a contract for your services that may apply to a Claim. There is no need for such provisions. Every claim or lawsuit that is instituted against an architect will be subject to exiting law and settlement protocols applicable in the jurisdiction where the claim or lawsuit is filed.  “Silence in the contract” is much preferred to a set of provisions that can result in a denial of coverage or imposition of the new sub-limit. “Silence in the contract” can also encourage rational discussion about a sensible process if the need arises.

Additional Information

This bulletin notes previous efforts to convince architects to NOT agree to client-authored dispute resolution provisions in contracts for their services. Most of these have been provided through Risk Service contract reviews requested by the architect. However, Risk Education information has been posted on the Pro-Demnity website or included in OAA standard forms of contracts for architectural services.  These include:

• Risk Transfer Concerns with Insurance Implications

A March 2018 article prepared for an RAIC submission to a Senate Committee includes a number of concerns with Client-Authored contract provisions including a reference to client-authored Dispute Resolution or Settlement Provisions included in a Contract.

• Arbitration is a Four-Letter Word!

A July 2021 example of more extensive Risk Education information provided to all Ontario architects is posted on the Pro-Demnity website: The Straight Line Newsletter – Issue 15 (July 13, 2021).

The article includes a description of some of the factors that make arbitration a problematic (and expensive) dispute resolution process. Underlining for emphasis:

• As a further detriment, these provisions invariably increase the costs that Pro–Demnity must pay to defend the architect – additional costs that are borne by all of the architects participating in the program.
• There are no inherent cost savings with the arbitration process when compared with processes reliant on the courts. Experience suggests the opposite: The costs may be substantially more, since the parties to the arbitration will need to pay for a venue as well as the arbitrator’s (or arbitrators’) fees.

• Some client-authored dispute resolution provisions refer to protocols that require a panel of arbitrators – dramatically increasing the costs the architect will have agreed to share or assume.

• Arbitration in Ontario, generally, has other significant drawbacks, including the inability to bring other parties into the arbitration without their express consent.

• When consent is not forthcoming from an entity that should be included, the parties to the arbitration may find themselves facing multiple actions with significant cost and litigation risk implications.

• Without these client-authored provisions in the contract, the decision to participate in an arbitration would involve mutual agreement of the parties to the dispute, in accordance with the rules in place in each jurisdiction.

• Where the dispute qualified as a Claim, as defined by the architect’s professional liability policy, Pro-Demnity’s decision to participate (or not), and in what capacity, would be based on the architect’s best interests.

• Arbitration has its place, but it is not a panacea. In some instances, it may be useful in resolving some aspect of a Claim. However, it doesn’t make sense to attempt to determine the most appropriate and effective means of resolving a dispute or Claim until the issue arises, and the circumstances are understood.

In addition, and very importantly, most mandatory arbitration provisions limit the ability of the parties to appeal the arbitrator’s decision. Even where they do not, judges place a very high degree of deference on an arbitrator’s decision when they do review them, and only very rarely interfere with the result. This can result in decisions through arbitration that would not be reached through the ordinary legal process – costing one or other of the parties significant damages that would not have been awarded by a court. The restricted ability to appeal an arbitrator’s decision prejudices Pro-Demnity’s ability to effectively manage the defence it is obliged to provide and can significantly drive-up costs incurred to defend the architect.             

• OAA Document 600-2021A:

Pro-Demnity worked with the OAA to develop appropriate “Dispute Resolution” provisions

that have been incorporated in OAA Document 600 2021A. These provisions have been referenced earlier in this bulletin. The OAA contract wording provides for the use of arbitration “by mutual consent,” addressing Pro-Demnity’s major concerns.

Another benefit of the Dispute Resolution provisions in OAA Document 600-2021A is provision of an example of appropriate dispute resolution wording as a benchmark against which an architect may compare any client-authored provisions.

Paragraphs 16.4, 16.5 and 16.6 referenced earlier are included below. Underling is for emphasis:

16.4    If the Dispute is not resolved through mediation, the parties are free to pursue whatever means of dispute resolution is available to them through the courts of the applicable jurisdiction.

16.5   Subject to mutual agreement, the parties to the Dispute may choose to refer the Dispute or any issues that are part of the Dispute to arbitration for final resolution.

16.6   The Client agrees that, should a construction Contract include a provision that any dispute between the Client and the contractor may be finally resolved by arbitration, such construction contract shall include provisions satisfactory to the Architect* that:

.1   require the Client and contractor to give the Architect Notice in Writing of any agreement to arbitrate a dispute between the Client and contractor in which the Architect has a vested or contingent financial interest in the outcome thereof and of any matters in dispute that affect the Architect;

.2   provide that, upon receipt of the Notice in Writing in GC 16.6 above, the Architect shall have the option to participate in the arbitration as a party; and

.3   provide that, in the event GC 16.6.1 and GC 16.6.2 above are not complied with, the Client and contractor agree any decision or award arising from such arbitration is not admissible in any dispute resolution process involving the Architect and shall otherwise not be used in any way to support or further any claim against the Architect.

*Note:  In 16.6 above, as a practical matter, “provisions satisfactory to the Architect” means “approved by Pro-Demnity Insurance Company in writing.”

Please contact the Risk Services Team for any support or questions regarding this bulletin.

City of Brampton labour dispute notice puts architects at risk of liability exposure

Pro-Demnity has been made aware that, due to the current labour disruption and suspension of building inspections in the City of Brampton, Brampton has issued a Builder Bulletin on November 7, 2024, “Important Notice to Builders”, that would “allow” Professional Engineers or Architects to take on the inspections normally conducted by the municipal building inspectors who are on strike. These inspections would require submittals of detailed and extensive inspections reports at “each inspection stage.” 

There may be serious professional liability insurance coverage concerns by agreeing to undertake such services.

Architects who undertake such services would be assuming considerable additional liability for services that are not “customary and usual” and would consequently not be covered by Pro-Demnity’s Professional Liability Insurance Policy. It should be noted that, although architects have no contract or indemnity from the City, the City may claim reliance on any inspection reports produced by architects. Undertaking such services, would also amend fundamental terms of architects’ contracts with their Developer-Clients further opening them to additional exposure.

The key issues are as follows:

• Architects would be stepping outside of usual and customary roles of an architect and would not have access to professional liability insurance coverage.
• Architects do not have access to the full duties and responsibilities of a city building inspector (that would be in the job description for that role) and should not guess at what the full duties are.
• Architects have no contract or indemnity from the city.
• Architects are not being paid to do this work and would be seeming to be taking on the duties of someone who is paid to do this work … and who is not working because of a strike situation. We are not labour lawyers, but it would seem to be uncomfortably close to being perceived as picking sides in a labour dispute.
• Paragraph 3 of the city’s bulletin, notes that all submissions will be reviewed after the work stoppage has ended and any deficiencies or required revisions will be advised then. This is a perfect set-up for a claim, as the building inspector may retroactively demand change to work already completed based on the architect’s report.

In summary, if requested by your builder-client to perform detailed inspections for the City of Brampton in the above capacity, you should decline as no coverage will be afforded to you in the event of a claim. If you have any questions, please feel free to reach out to Pro-Demnity’s Risk Alliance team at, an OAA Practice Advisor or your own legal counsel.

Contents

Introduction
Coverage Requirements for Ingress of Precipitation (Water Ingress) Claims
What Has Changed
Precast Concrete Cladding Considerations
Understanding the Technical Requirements Schedule:
Part A – Exterior above-grade wall systems
Part B – Architectural Precast Concrete Exterior Wall Assemblies
Part C – Window Wall Assemblies
Part D – Insulated Metal Panel Exterior Wall Systems (IMP Systems) – added as of April 1, 2026 – refer to the Bulletin
Definitions
Conclusion

Introduction

Ingress of precipitation through a building envelope, often referred to as water ingress, has been a major source of claims against Ontario architects for decades. In the 1980s the primary issues involved masonry wall failures, leading to the development and adoption of the “rainscreen” – primary and secondary planes of protection with provision for drainage to the exterior of precipitation that penetrated beyond the exterior face of the cladding – now the accepted minimum standard applicable to most exterior cladding systems.

In the late 1990s, architects were facing a significant and growing number of water ingress claims involving face-sealed, non-drained exterior wall systems that, if unchecked, threatened the financial viability of the OAA’s professional liability insurance program. This was not unique to Ontario – the British Columbia “Leaky Condo” crisis had triggered catastrophic losses for professional liability insurers and loss of PLI coverage for many architectural practices. Where available, coverage for Water Ingress claims was subject to conditions imposed by the insurer, including use of drained cladding assemblies, involvement of recognized building envelope specialists and extended warranties from suppliers and contractors.

Recent data and information available to Pro-Demnity confirms that water ingress claims continue to be a significant factor impacting Ontario architects. The current push for “more – faster – cheaper” combined with other factors impacting the risks faced by architects and other design professionals related to Ingress of Precipitation claims provide the backdrop for this article. We encourage architects to take the time to review the contents carefully.  Your practice’s financial viability may depend on it.

Coverage Requirements for Ingress of Precipitation (Water Ingress) Claims

Since 2004, in the wake of the British Columbia Leaky Condos catastrophic insurance losses, Pro-Demnity Insurance Company and its predecessor, the OAA Indemnity Plan, has excluded coverage for ingress of precipitation (water ingress) claims.  

However, when the architect’s design meets specific requirements as outlined in the former Non-Drained Exterior Wall Exclusion (Endorsement 3 in the prior policy) and Window Wall Endorsement, OR the recently released Technical Requirements Schedule, the architect will have coverage for professional liability claims related to ingress of precipitation.

The consistent requirement for ingress of precipitation coverage remains unchanged – a “drained” or “rainscreen” assembly as described in Part A, Item a) of the Technical Requirements Schedule. The only exception applies to a solid masonry or concrete exterior above-grade wall “where drying of the masonry or concrete is not adversely affected by any other exterior building material”. Recognizing other practical, regulatory and building code requirements, use of such walls for occupied spaces will be rare.

What Has Changed

On February 1, 2024, Pro-Demnity advised Ontario architects about the Refreshed Pro-Demnity Policy wordings that would come into effect for each practice at the time of their next annual practice renewal, on or after April 1, 2024:

NEW: Refreshed Policy Wordings

In the 2024 Refreshed Policy wording, the coverage exclusion for ingress of precipitation, the Non-Drained Exterior Wall Exclusion, has been relocated to Exclusion 21 of the policy.

The Pro-Demnity February 1^st notice also advises of the creation of a new schedule to the policy – that forms part of the policy – called the Technical Requirements Schedule.

Together, Exclusion 21 and the Technical Requirements Schedule replace the former Non-Drained Exterior Wall Exclusion (Endorsement 3) and the Window Wall Endorsement.

Precast Concrete Cladding Considerations

The new Technical Requirements Schedule – Part B provides an alternate, additional means of achieving coverage for ingress of precipitation for an exterior above-grade wall assembly that utilizes precast concrete panels in a non-drained / non-rainscreen configuration.

Since January 1, 2010, the Non-Drained Exterior Wall Exclusion has provided coverage for claims for ingress of precipitation for buildings with exterior wall assemblies using precast concrete panels, provided that the “Precast Concrete walls were designed and constructed as drained systems utilizing two stage drained joints”.

However, Pro-Demnity became aware that some architects have been designing exterior claddings using precast concrete panels in non-drained configurations that would not meet these requirements for ingress of precipitation coverage. For instance, where an architect or its client has opted to utilize single-wythe precast concrete panels in a non-drained assembly, the architect would not have coverage for ingress of precipitation.

It also became apparent that some architects had accepted incorrect advice that a drained or rainscreen assembly was NOT a requirement for Pro-Demnity’s ingress of precipitation coverage if “two-stage drained joints” were specified and provided.

The new Technical Requirements Schedule – Part A, Items A.g) and A.h) clarifies that BOTH a drained assembly AND two-stage drained joint methodology are required for the architect to have coverage for ingress of precipitation.

After much analysis, consideration and consultation with industry experts, Pro-Demnity also added a new route to water ingress coverage for architects designing non-drained exterior wall assemblies utilizing precast concrete panels as described in Part B of the Technical Requirements Schedule.

Understanding the Technical Requirements Schedule

The Technical Requirements Schedule includes Parts A, B & C plus applicable Definitions.

Part A includes a list of types of exterior wall systems and components for which coverage for ingress of precipitation / water ingress is already provided.

Part B is new, addressing water ingress coverage requirements for a non-drained assembly utilizing Precast Concrete panels.

Part C addresses water ingress coverage requirements for Window Wall.

Part A – Exterior above-grade wall systems

Part A replaces the list of requirements for water ingress coverage for listed systems and components included in the former Non-Drained Exterior Wall Exclusion (Endorsement 3).

Where an exterior wall assembly is not specifically listed in Part A, provision A.a) of theTechnical Requirements Schedule applies. Exempted from Exclusion 21 are:

1. Exterior above-grade walls or wall assemblies designed and constructed according to rainscreen principles that include both Primary and Secondary Planes of Protection (water barriers), provision for drying of the assembly, and an air space no less than 10mm deep behind the cladding with positive drainage to the exterior to protect the interior of the building from precipitation that penetrates the Primary Plane of Protection

If the design and constructed exterior wall assembly comply with the requirements of Part A there is no need to consider the requirements in Part B or Part C.

Part B- Architectural Precast Concrete Exterior Wall Assemblies

The intent of Part B is to provide support to architects using cladding systems utilizing Precast Concrete panels that would otherwise not have water ingress coverage. It is considered an expansion of available coverage for ingress of precipitation.

Some architects have been concerned that Pro-Demnity is adding a new restriction on coverage related to precast concrete panels. This is not correct. With Part B, Pro-Demnity is providing an additional coverage option.

Provisions A.g) and A.h), continue to provide ingress of precipitation coverage for exterior wall assemblies utilizing precast concrete panels “designed and constructed according to rainscreen principles utilizing drained and vented two-stage joint methodology” without any need for involvement of additional Independent Building Envelope Consultant’s services, or adherence to other requirements called for in Part B.

Please note the introductory paragraph at the top of Page 2 of the Technical Requirements Schedule that starts with the words: “In addition, (to the preceding provisions in Part A.) we will cover You…etc.” 

Under the refreshed policy wording and the Technical Requirements Schedule, architectural practices now have the option, but not the obligation, to secure water ingress coverage for precast concrete claddings that are not used in a drained system configuration by adopting the provisions in Part B. Use of this option will be each practice’s decision and might vary by project depending on the circumstances.

Part C – Window Wall Systems

The former Window Wall Endorsement (included with every Pro-Demnity policy since July 28, 2009) is now replaced by Part C of the Technical Requirements Schedule. The new Technical Requirements Schedule requirements include the following updates to reflect the passage of time and experience gained over the last 15 years. Updates include:

• Window Wall Systems are now defined in the Definitions section of the Technical Requirements Schedule.

• Independent Building Envelope Consultant (IBEC) replaces the term Independent Consultant and is defined in the Definitions section of the Technical Requirements Schedule.

• Updates reflect the addition of OBC, Division B, Subsection 5.9.4. Other Fenestration Assemblies, which includes provisions for the minimum performance of Window Wall systems, including,

• Updating the referenced standard to CSA A440.6 High Exposure Fenestration Installation.

• Clarification that shop drawings, test reports, mock-ups, and the warranty to be provided by the Window Wall manufacturer include “transitions and seals to adjoining assemblies and materials”.

• Clarification that the IBEC maintains professional liability insurance, is engaged as a “member of the design team for the project” and may not be a “principal or employee of an entity providing Tarion Registrar Bulletin 19 services on the project”; all as called for in the Definitions.

Part D – Insulated Metal Panel Exterior Wall Systems (IMP Systems)

This section has been added as of April 1, 2026. Please refer to the Bulletin related to IMP Systems.

Definitions

The Technical Requirements Schedule includes a list of definitions applicable to the contents of the Schedule.

Perhaps the most significant definition included in the Technical Requirements Schedule applies to the acronym “IBEC”:

 “IBEC” means an Independent Building Envelope Consultant which is an architect holding a Certificate of Practice, or professional engineer holding a Certificate of Authorization with relevant Precast Concrete building envelope or Window Wall experience that:

1. has demonstrated experience with the use of Precast Concrete Wall Assemblies or Window Wall Assemblies respectively;

1. maintains professional liability insurance with claim limits not less than the limits maintained by You, and in no case less than $1,000,000 per claim, $2,000,000 in the aggregate;

1. is engaged as a member of the design team for the project, either by the client or by You;

1. is not a principal or employee of Your practice, unless:

1. the principal or employee of Your practice acting as the IBEC on the project holds a recognized Building Science Specialist designation (BSS) administered by the Building Science Specialist Board of Canada (BSSB);

• they were not the principal or employee of Your practice who prepared Your design; and

• independent documentation of their provision of recommendations and review of Your design within the meaning of clauses B., b), i) and ii) and C., b), i) and ii) above, is maintained in this schedule; and

• is not a principal or employee of an entity providing Tarion Registrar Bulletin 19 services on the project.

Another definition that eliminates a possible source of confusion applies to Part A, item f):

“Solid masonry or concrete walls” shall not include Insulated Concrete Form (ICF) systems or Precast Concrete Panels; (underling for emphasis)

As noted in the discussion of Part C – Window Wall Systems, Window Wall is also defined, filling a gap that existed at the time the original Window Wall Endorsement was prepared. The definition draws on the terminology developed by a Task Group updating the National Building Code – 2015 – Other Fenestration Assemblies:

“Window Wall Systems” means a window wall considered to be a wall cladding assembly (which may include fenestration and opaque portions) that spans from the top of a primary floor structure to the underside of the next higher primary floor structure. Window wall assemblies do not generally support vertical loads other than their own weight. Primary provision for anchorage occurs at head and sill connections with the adjoining floor structure. Window wall assemblies may include separate or integral floor edge covers.

“Insulated Metal Panels (IMPs)” means prefabricated plant-manufactured composite exterior wall panels incorporating:
– an impervious metal exterior layer,
– an insulation layer,
– an impervious metal inner layer,
– pre-formed interlocking tongue-and-groove formed joints using two-stage drained and vented joint technology,
– with seals within the formed joints between the IMP panels.

Conclusion

Architects are encouraged to familiarize themselves with Exclusion 21 and the referenced Technical Requirements Schedule, including the applicable definitions, to better understand the requirements to be met if the architect is to have coverage for ingress of precipitation on the projects they design.

Architects are also reminded that coverage determinations can only be made at the time a claim arises, based on the allegations against the architect and the then-known circumstances. However, architects whose past projects’ design and construction complied with the former Non-Drained Exterior Wall Exclusion and Window Wall Endorsement OR whose current and future projects comply with the new Technical Requirements Schedule can be confident that they will have coverage for Ingress of Precipitation (Water Ingress) claims on those projects.

Please also remember that Pro-Demnity will never endorse any assertion made by any product manufacturer, industry association or other entity related to coverage provided by your Pro-Demnity policy. Architects are encouraged to contact a member of the Pro-Demnity Risk Services team with any questions regarding the Technical Requirements Schedule as may apply to specific situations.

The information provided in this article related to coverage for ingress of precipitation claims is based on the available sample Pro-Demnity policy wordings.  However, architects are cautioned to check their own policies for any amendments to their own coverage that may apply. This summary of the Technical Requirements Schedule is intended to assist you in understanding your coverage and is not a substitute for the actual Policy wording.  Please refer to your Policy document for complete terms, conditions, and exclusions.

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General Disclaimer

The contents of this page and any other published material from Pro-Demnity offer information for general informational purposes only. The material presented does not modify the standard of care for architects in Ontario and does not alter the Pro-Demnity policy provisions. The information is by necessity generalized and an abridged account of the matters described. It should in no way be construed as legal, technical or insurance advice and should not be relied on as such. Readers are cautioned to consult with their own legal or professional advisors for specific questions and to conduct their own due diligence, as accuracy of referenced material is not guaranteed. This web page should not be reproduced in whole or in part in any form or by any means without written permission of Pro-Demnity Insurance Company. Please contact mail@prodemnity.com.

In early August, 2024, Pro-Demnity became aware that the City of Sudbury was advising architects who were expressing concern about the Professional Liability Insurance (PLI) implications of Supplementary Conditions (SCs) to OAA Document 600-2013 that the City’s SCs were the result of “collaboration” with Pro-Demnity Insurance Company. This statement was untrue and misleading. We repeat the City’s answer to an architect’s question here:

Answer: Thank you for your email. Your question was sent to the City’s Legal and Risk Departments. This email is to advise that it has been reviewed and no revisions will be made. The City has worked collaboratively with the OAA and Pro-Demnity with regards to the Supplemental Conditions. Thank you. Individual’s name, Purchasing Agent.

Pro-Demnity reached out to those responsible for the misleading advice seeking an explanation or retraction. A month later, in September, we finally received an acknowledgement that the City’s statement was inaccurate. However, the City’s Procurement Representative declined to make the appropriate amendment to their indemnification wording – deletion of the obligation for the architect to “defend” the City in the event of a Claim – that had been the source of the architect’s question in the first place. Despite the rejection, the Procurement Representative advised that the City was planning a review of its Supplementary Conditions in the near future.

Architects considering responding to RFPs issued by the City of Sudbury should pay careful attention to the content of the City’s Supplementary Conditions amending standard forms of agreement for architectural services. As correctly noted by the architect who contacted Pro-Demnity, the indemnification obligations authored by the City Pro-Demnity expose the architect to obligations that exceed what already exist at law in the absence of the contract. To the extent the obligations exceed the architect’s already existing liability at law, there will be NO PROFESSIONAL LIABILITY INSURANCE COVERAGE should the client attempt to enforce the obligation.

We refer to these types of provisions as “Murder Clauses”. Other professional liability insurers describe these as “deal breakers” in the risk management advice they provide to insured architects and engineers.

The City of Sudbury is not alone in pursuing this approach – presumably in the belief that exposing architects to uninsured liability will somehow benefit the City, albeit at the personal expense of the professionals retained by the City.

In our exchange with the City of Sudbury’s Procurement Representative we shared the following:

For your information, we typically advise architects to address such a “Murder Clause” in one of three ways:

• Add a “Notwithstanding Clause” as follows:

“Notwithstanding the foregoing, the obligations and liabilities of the Architect are limited to the professional liability insurance provided by Pro-Demnity Insurance Company and any specific or excess professional liability insurance coverage in force.”

• Replace the entire item with indemnification wording that is in sync with an architect’s liability at law and its insurance coverage:

“The Architect shall, within the limits of its insurance coverages as stipulated in the contract, indemnify the Client from claims, demands, losses, costs, damages, actions, suits or proceedings in respect of claims by a third party and from losses, costs, or damages suffered by the Client, provided these are attributable to error, omission or negligent act in the performance of the professional services of the architect or of those for whom it is responsible at law.”

• Delete the entire item as unnecessary…except to expose the Architect to uninsured liability. The Architect’s indemnification obligations under applicable law already apply in the absence of the clause.

You note your intention to review your current SCs including amendments to OAA Document 600-2013. It will probably make more sense to familiarize yourselves with OAA Document 600-2021 which has replaced the 2013 version. The second option above is a direct lift from the 2021 version.

We strongly recommend that architects considering responding to an RFP issued by the City of Sudbury, or other client organizations amending a standard form of contract:

• Obtain legal advice on the legal and insurance implications of all client-authored changes,

• Make any response to the RFP conditional on adoption of one of the measures noted above,

• If you decide to not participate in the RFP process due to concerns about the client’s contract provisions advise them so in writing, with a copy to the OAA Practice Advisors and Pro-Demnity Risk Services.

Clear, modernized professional liability policy wordings.
Same robust coverage for architectural firms.

Innovation and continuous improvement to our services and products are fundamental to Pro-Demnity’s strategic plans over the next three to five years. We’re building on our promise to provide an alliance for protection to Ontario’s architectural firms, actively considering and responding to client as well as employee feedback. To this end, we’ve initiated a four-phase underwriting project that aims to address policy wordings (phase 1), the current pricing model (phase 2), introduce more efficient processes (phase 3) and enhance technology (phase 4) to improve the new application and renewal experiences for all Certificate of Practice holders.

Today, we’re pleased to announce the upcoming modernization of the professional liability insurance policy wordings.

Updated policy wordings

Improved clarity and harmonization are the key drivers in modernizing Pro-Demnity’s professional liability insurance policy wordings. Your policy wordings are a detailed explanation of your coverage. They describe what is covered under your policy and any endorsements, exclusions, conditions, or limitations that apply. Starting April 1, 2024, upon renewal, we’ll be introducing a refreshed policy that features clearer wordings, terms, and definitions.

Professional liability insurance coverage from Pro-Demnity, which is already robust and effective in protecting and defending architects remains fulsome and we continue to insure Ontario Architects for allegations of error, omission, or negligence in the usual and customary practice of the profession of architecture.

After a detailed review of our core product, we’ve clarified coverages and harmonized language to make it easier for clients to understand their coverage, resulting in one seamless professional liability insurance policy for all architectural practices.

• One policy only.  Whether you are purchasing mandatory or increased limits, you will receive the same Professional Liability Insurance policy. The wordings of Policy 1 (mandatory limits) and of Policy 4 (increased limits) have been harmonized, with coverage clarified, eliminating the need for two separate types of policies. This one policy will be known simply as the Professional Liability Insurance policy.
• Standard endorsements and extensions are included within one Professional Liability Insurance policy. Every existing Standard Endorsement and Extension are now integrated into the policy for ease of reference.
• A new Technical Requirements Schedule is part of the Policy. Technical requirements previously refenced in Endorsements and Extensions, have now been consolidated in a Technical Requirements Schedule for easier and quicker reference. The Technical Requirements Schedule may be updated from time to time as technical requirements change, without us needing to re-write our endorsements or policy wordings. Any updates to the Technical Requirements Schedule will always be communicated to you prior to coming in force.

  Please note that a new standard endorsement specific to Precast Concrete Panels/Cladding is being added, further to a successfully completed pilot with a handful of architectural practices.

• Easier to read. The readability of the policy is improved with a friendlier overall tone to aid in understanding of insurance coverage.
• April 1, 2024. Refreshed policy will be introduced for renewals beginning April 1, 2024. This date is historically aligned with the start of the next policy year (Year 38).
• Other products/policies are not impacted. Retirement from Practice (currently known as Policy 2) and Spike up on Annual Practice Limits remain unchanged.

Coverages and limitations made more explicit

Coverage language is generally more overt in the refreshed policy wordings. Being explicit ensures that the interpretation of coverages or limitations is clear and accurately reflects our existing best practices. In making the protections easier for principals / architects to read and understand, we also endeavour to illuminate potential risk areas for architectural firms, which are exposures that Pro-Demnity seeks to reign in with respect to the broader risk of claims that may negatively impact our program of insurance for all Ontario firms.

We draw your attention to the following instances where coverage language is more explicit in the refreshed policy:

1. Addition of a new sub-limit in cases where Mandatory arbitration is required in a contract:  “If You have agreed, in a contract for professional services, to a mandatory arbitration or other type of dispute resolution clause that removes or restricts Our ability to defend You, and there is a Claim made that relates to such contract, the maximum amount of all Damages and Claims Expenses that we will pay on Your behalf or reimburse to You shall not exceed $50,000 for one Claim and $100,000 for all Claim(s) reported during the Period Of Insurance”.  

   This sub-limit will take effect for contracts signed on or after July 1, 2024. It is intended to encourage Certificate of Practice policyholders to pay particular attention to Dispute Resolution clauses in contracts which erode protections from Pro-Demnity that would otherwise be yours. [How much We will pay: Our limit(s) of Liability and Your Deductible. Important Sub-Limits and Reductions to Limits of Liability. Item 6]

2. Standardization of the Claims Expense limit when there is excess insurance with another insurer: The Claims Expense limit is capped at $300K when a policyholder, “specifically arranged professional liability insurance that applies as excess to the insurance provided by…[Pro-Demnity].”  The Claims Expense limit is now the same for policyholders of either mandatory limits or increased limits.  [How much We will pay: Our limit(s) of Liability and Your Deductible. Section C. Item 2.] 
3. Clarification of “jurisdiction”: we make it clear that where a project is located outside of Canada, Pro-Demnity only covers claims brought forward in Ontario unless we have explicitly agreed to cover them elsewhere, based on the information you provide in your application for professional liability insurance. This is consistent with our current practice and provides greater clarity than our current wording. [What is Covered? Items 3. 4. 5.]
4. Clarification of coverage related to Fee Disputes: claims arising out of a fee dispute are not covered. This reinforces our current practice and policy wording. [Exclusions: What is Not Covered. Item 3]
5. Clarification of coverage related to Geotechnical engineering and Surveying Services. The performance or engagement of geotechnical engineering services or services that constitute the practice of cadastral and professional surveying under the Surveyors Act, are not covered. This reinforces our current practice and policy wording [Exclusions: What is Not Covered. Item 17]. Further, the performance or engagement of professional services related to “pollution” are also excluded. [Exclusions: What is Not Covered. Item 18]
6. Clarification of Liability of Others Assumed Under Contract. Any liability of others You have assumed under contract or other agreement (whether written or oral), except that We will cover You for Your liability for Insureds, provided that Your liability would have already existed at law in the absence thereof. [Exclusions: What is Not Covered. Item 6]
7. Clarification of Liability to Others Assumed Under Contract. Any liability to others You have assumed under contract or other agreement (whether written or oral), except that We will cover You for Your liability for Insureds, provided that Your liability would have already existed at law in the absence thereof. [Exclusions: What is Not Covered. Item 7]
8. Clarification of coverage related to Communicable Disease Outbreak. Claims related to public health emergencies are not covered or government regulation related to same is not covered. [Exclusions: What is Not Covered. Item 19]
9. Clarification of coverage related to Strikes. Claims related to labour strikes are not covered. [Exclusions: What is Not Covered. Item 20b.]

Further updates to the refreshed policy

You will note that reference to a Plan Credit is no longer part of the refreshed policy. Pro-Demnity is obligated to ensure the financial stability of the overall program of insurance for architectural practices in Ontario, secured through annual rate changes and appropriately calibrated pricing based on actual claims experience.

The refreshed policy wordings also contain some new sections to help aid in understanding as well as to align with current practices in the insurance sector:

• Key sections added at the start of the Professional Liability Insurance Policy: an Introduction, Our Obligations, Your Obligations, and Information You have given Us. Although our overall goal is to have an approachable tone, we have toughened our wording about both misrepresentation and non-payment.
• The addition of an explicit “Sanctions” clause, based on the wording in our reinsurance policy. This clause requires us to follow the sanctions rules of Canada, the USA, the EU, and the UK. [Exclusions: What is Not Covered. Item 28]
• An expanded and updated “Definitions” section.

Resources available to you

You are encouraged to read the:

• refreshed Professional Liability Insurance policy when you receive it at your next renewal (on or after April 1, 2024).
• Technical Requirements Schedule which forms part of your policy. Do share it with your team: architects, project leaders, interns and others in your firm, who can help you manage risk during the design phases of projects. Refer to the Technical Requirement Schedule frequently to ensure your designs comply with and qualify for ingress of precipitation coverage.
• Frequently Asked Questions.

Your refreshed policy will come in force upon your next renewal on or after April 1, 2024.

For policy-related questions, the Underwriting team may be reached at 416-386-1770 x.3 or mail@prodemnity.com.

For guidance on specific risk situations that you may be facing, please contact our Risk Services team and book a meeting to Speak with an Expert.

For general information visit www.prodemnity.com.

Next steps

You will hear from our Underwriting team as you typically do 60 days prior to renewal.  Please review your renewal documentation and respond as soon as possible, and at least 30 days prior to your renewal date to ensure no interruption to your coverage.

Best-in-class coverage

Professional liability insurance is a valuable, integral component of your architectural firm’s professional services, and we’re pleased to provide you with best-in-class coverage featuring contemporary, clear wordings.

Your Pro-Demnity policy offers peace of mind, reliable protections, and coverages unique to the practice of architecture in Ontario. As your allies, we strive to provide you with professional service, innovative products and exceptional claims-handling while championing your wise, effective, and efficient management of risk.

We look forward to serving you soon and supporting your architectural practice in the months ahead and years to come.

On January 30, 2024, Pro-Demnity announced that its Professional Liability Insurance Policy is updated to be clear, easy to read and understandable, while maintaining the same great robust coverage as always for architectural practices.

The refreshed Professional Liability Insurance Policy includes a new Technical Requirements Schedule and reflects more explicit coverage terms that align with our best practices.

Please read the Announcement which accompanies the FAQs below. The refreshed Professional Liability Insurance Policy comes into force on April 1, 2024, upon your firm’s next renewal.