An Auckland family claims to be on the verge of financial ruin over their deck due to a mountain of construction and legal costs and the refusal of their architect’s professional indemnity insurer to compensate for their losses.
Michelle van der Veer said that she and her husband hired an architect to manage the replacement of an elevated deck at their home, with the condition that it should not infringe on the cross-lease they shared with their neighbours.
However, the new deck still ended up breaching the cross-lease, resulting in legal trouble. The legal fees and remedial building work led to the family’s humongous debt, pushing them to launch a bid for compensation from the architect and therefore triggering his professional indemnity insurance.
“Insurer X’s lawyers know that our legal advice will be, that if we dare pursue this insurance claim and spend years and tens of thousands of our hard earned money getting it into court, if we win our case, then we, the victims, need to pay for the architect’s long drawn out legal defence,” van der Veer told Stuff.co.nz.
“Consumers are lulled into a false sense of security on hearing professionals and the professional bodies they are members of, hold indemnity cover should something go terribly wrong.”
Jessica Wilson, head of research at Consumer NZ, said the case reflected the fact that there is too little transparency about professional indemnity insurance and therefore too little public understanding of how it actually works and how much it is for.
“As a consumer you are relying on the fact that your contract with an architect says they have professional indemnity insurance, but if you do need to claim on that, you can’t deal with the insurer directly,” she said.
“Even though building work is the area where you spend the most money, and have the biggest risk, you are on your own to chase builders and architects through the courts for recompense.”
