Pro-Demnity has introduced sub-limits on policy coverage for architects, specifically affecting contracts that include a mandatory arbitration clause. Those sub-limits apply to damages and claims expenses, capping coverage at $50,000 per claim and $100,000 for all claims within an annual insurance period. The changes apply to contracts signed on or after July 1, 2024.
Pro-Demnity has long advised architects against accepting client-imposed dispute resolution processes, as they increase claims costs and lead to higher premiums for all Ontario architects. This policy change is intended to discourage mandatory arbitration agreements an promote a fairer distribution of risk.
Key recommendations for architects
To avoid the impact of the sub-limit, Pro-Demnity advises architects to:
- Avoid client-mandated dispute resolution clauses in contracts.
- Ensure arbitration is optional and requires mutual consent, rather than being mandatory.
- Remove contract language that could trigger the sub-limit—it is preferable to leave the contract silent on arbitration.
Reference to OAA Document 600-2021A
OAA Document 600-2021A, developed with Pro-Demnity’s input, includes appropriate dispute resolution provisions: Specifically, GC 16.4, 16.5, and 16.6 should remain unchanged, as they require mutual consent if the parties proceed to arbitration. Practically, the requirement for “provisions satisfactory to the Architect” should be treated as meaning “approved by Pro-Demnity Insurance Company in writing”
To learn more about this policy change, review the bulletins on Pro-Demnity’s website:
- Mandatory Arbitration Jeopardizes Your Coverage with the Stroke of a Pen and Handcuffs your Defense - Pro-Demnity - Architect Liability Insurance - Pro-Demnity – Architect Liability Insurance
- NEW: Refreshed Policy Wordings - Pro-Demnity - Architect Liability Insurance - Pro-Demnity – Architect Liability Insurance