PROFESSIONAL INSURANCE PORTFOLIO - PI ARC Portfolio (2)

The General Terms and Conditions and the following terms and conditions all apply

to this section.

The activities shown in the schedule, which you perform in

the course of your business.

Costs incurred with our prior written agreement to

investigate, settle or defend a claim against you.

Also includes any person who was, is or during the period of

insurance becomes your partner or director or senior

manager in actual control of your operations.

If during the period of insurance, and as a result of your business activity within

the geographical limits for clients, any party brings a claim against you for:

a.

b.

c.

d.

e.

f.

negligence or breach of a duty of care,

negligent misstatement or negligent misrepresentation,

infringement of intellectual property rights including copyright, patent,

trademark or moral rights or any act of passing-off,

breach of confidence or misuse of any information, which is either confidential

or subject to statutory restrictions on its use,

defamation,

dishonesty of your individual partners, directors, employees or self-employed

individuals directly contracted to you and under your supervision,

or refers a dispute arising directly from your breach of a duty of care to adjudication

under the Housing Grants Construction and Regeneration Act 1996, we will

indemnify you against the sums you have to pay as compensation.

We will also pay defence costs but we will not pay costs for any part of a claim not

covered by this section.

PROFESSIONAL INSURANCE PORTFOLIO - PI ARC Portfolio (2)

If your client has reasonable grounds for being dissatisfied with the work you have

done, refuses to pay for any or all of it, including amounts you legally owe to sub-

contractors at the date of the refusal, and threatens to bring a claim against you for

more than the amount owed, it may be possible to settle the dispute with the client by

your agreeing not to press for the disputed amount. If so, we will pay you the

amount owed to you at that time if we believe that this will avoid a legitimate claim for

a greater amount and we have given our prior written approval to settling in this way

and for this amount.

Alternatively, if it is not possible to reach agreement with the client on this basis but

we still believe that by not pressing for the disputed amount you will avoid a

legitimate claim or counterclaim for a greater amount, we will pay the amount owed

to you at that time. If a claim is still brought, we will deal with it but our total

payment, including what we have already paid you or on your behalf, will not exceed

the applicable limit of indemnity shown in the schedule. You must return the amount

we have paid if you eventually recover the debt less your reasonable expenses.

Once we agree to make this payment you will assign to us such rights as you have

in relation to the amounts owed to you.

We will not make any payment for any part of a claim not covered by this section.

If you are charged with a criminal offence during the period of insurance under a

statute or regulation that applies to your business activity, we will pay the

reasonable costs incurred with our prior written consent to defend you if, in our

opinion, a successful defence may avoid a claim which would be covered by this

section.

We will not make any payment for any claim or loss directly or indirectly due

to:

1.

any investment of, or direct advice on the investment of, client funds.

2.

any construction or erection work you undertake or for which you are

responsible as a building or engineering contractor.

3.

your operation or administration of any pension or employee benefit scheme or

trust fund, or the sale or purchase of or dealing in any stocks, shares or

securities or the misuse of any information relating to them, or your breach of

any legislation or regulation related to these activities.

4.

your breach of any taxation, competition, restraint of trade or anti-trust

legislation or regulation.

5.

any pollution or contamination, including noise, electromagnetic fields, radiation

and radio waves.

6.

the work of any personnel supplied by you to a client, unless you have

breached a duty of care in supplying them.

7.

transmission of a computer virus.

PROFESSIONAL INSURANCE PORTFOLIO - PI ARC Portfolio (2)

8.

your insolvency or financial difficulties.

9.

any survey, inspection or valuation of real or leasehold property not carried out

by a fellow or associate of the Royal Institute of British Architects, the Royal

Institute of Irish Architects, the Royal Incorporation of Architects in Scotland,

the Royal Society of Ulster Architects, the Institute of Chartered Engineers, the

Royal Institution of Chartered Surveyors, the Incorporated Society of Valuers

and Auctioneers or the Faculty of Architects and Surveyors, or by a Registered

Architect or Engineer with not less than one year’s relevant experience, or by

any person with more than five years’ relevant experience in undertaking

surveys, inspections or valuations of a similar nature.

10. any survey, inspection or valuation of real or leasehold property (other than a

report to a lending institution or insurance company on their standard form)

which does not include a reservation on the following lines:

• that you have not inspected woodwork or other parts of the structure which

are covered, unexposed or inaccessible, and that you are therefore unable

to report that such parts of the property are free from defect.

11. any acts or omissions of a specialist, designer or consultant working for you as

a sub-contractor unless:

a. you have taken reasonable steps to ensure that the sub-contractor has

and maintains professional indemnity insurance with a reputable insurer,

and

b. there is a written sub-contract between you and the sub-contractor which

is subject to English law, includes an arbitration clause and provides that

the sub-contractor will indemnify you against any liabilities you incur as a

result of the sub-contractor’s performance of the sub-contract; and

c.

you have disclosed the sub-contractor’s fees to us.

12. your failure to account for any money received. This does not apply to any

claim arising from dishonesty.

13. your agreement to take on any legal liability under any express agreement,

warranty, indemnity, waiver or guarantee, unless:

a.

b.

you would be liable even if you had not given any such agreement,

warranty, indemnity, waiver or guarantee; or

the liability arises from a Collateral Warranty or Duty of Care agreement,

in which case we will not indemnify you for any liability arising from:

i.

ii.

iii.

iv.

v.

any fitness for purpose guarantee;

any greater or longer lasting benefit than that given to the party

with whom you originally contracted;

any express guarantee, contractual penalty or liquidated

damages;

any assignment of the warranty or agreement to any

purchaser or tenant after the first two assignments or to any

funder, financer or banker after the first three assignments;

your agreement to exercise a standard of care greater than

would normally be expected in your profession.

14. activities carried out in the name of a consortium, joint venture or profit sharing

scheme in which you are a party.

PROFESSIONAL INSURANCE PORTFOLIO - PI ARC Portfolio (2)

15. the death or any bodily or mental injury or disease suffered by anyone, unless

arising directly from any design, specification, technical information calculation,

survey or inspection carried out by you.

16. anyone's employment with or work for you, or any breach of an obligation

owed by you as an employer or any kind of discrimination, harassment or

unfair treatment.

17. the ownership, possession or use of any land or building, any animal, any

aircraft, watercraft or any motor vehicle.

18. the loss, damage or destruction of any tangible property, unless arising directly

from any design, specification, technical information calculation, survey or

inspection carried out by you.

19. any fire damage involving or in any way related to the use of expanded

polystyrene or polyurethane core sandwich panels (EPS panels) in any project

where completion occurred:

a.

between 1 January 1993 and 30 March 1995, if you were aware of the

risk associated with EPS panels, unless the EPS panels were installed

only in areas of low fire risk;

b.

on or between 1 April 1995 and 30 June 1995, unless you complied with

all recommendations of RC25 - Recommendations for Insulated

Composite Panels.

c.

on or between 1 July 1995 and 31 October 1996, unless you complied with

all recommendations of Loss Prevention Standard LPS 1208 - Fire

Performance Requirements for Metal-faced Fire Resisting Insulated Panels;

d.

on or between 1 November 1996 and 30 November 1999, unless you

complied with all the recommendations of the LPC Design Guide for the

Fire Protection of Buildings (and complied with further parts of this Guide

as and when published);

e.

on or between 1 May 1999 and 30 November 1999, unless you complied

with all the recommendations of the LPC Code of Practice for Fire

Protection in the Food and Drink Industry;

f.

on or after 1 December 1999, unless you complied with all recommendations

of the LPC Design Guide for the Fire Protection of Buildings 2000 or any

subsequent guidance which supersedes this guidance.

The onus is on you to show that you have complied with all the requirements

in a. to f. above and to provide written documentation of such compliance

dating from the time of your involvement with the relevant project.

We will not make any payment for a claim against you resulting from anyone’s

inability to obtain insurance for any building, or to obtain it only at an increased

price, because of the use of EPS panels.

20. the loss, damage or destruction of computer records held in or recorded on a

computer system unless caused by the physical loss, damage or destruction of

the computer system itself.

21. any personal liability incurred by a director or officer of yours when acting in

that capacity or managing your business, or your breach of any fiduciary duty,

other than when performing a business activity for a client, or any statement,

representation or information concerning you or your business contained in

your accounts, reports or financial statements.

PROFESSIONAL INSURANCE PORTFOLIO - PI ARC Portfolio (2)

22. your supply, manufacture, sale, installation or maintenance of any product.

23. any statement you knew, or ought reasonably to have known, was defamatory

at the time of publication.

24. any act, breach, omission or infringement you deliberately, spitefully, dishonestly

or recklessly commit, condone or ignore. This does not apply to any claim under

the dishonesty cover in WHAT IS COVERED, but we will not in any event provide

cover to any party who actually commits, condones or ignores any dishonesty.

25.

any shortcoming in your work or your own loss which you knew about, or

ought reasonably to have known about, before we agreed to insure you.

26. date recognition.

27. war, terrorism or nuclear risks.

28. asbestos risks.

We will not make any payment for:

1.

any claim brought by an insured within the definition of you or any party with a

financial, executive or managerial interest in you, including any parent company

or any party in which you have a financial, executive or managerial interest,

including any subsidiary company. This does not apply to a claim based on a

liability to an independent third party directly arising out of the performance of

your business activity.

2.

a claim referred to adjudication under the Housing Grants Construction and

Regeneration Act 1996 where yourcontract with yourclient failed to provide that:

a. an adjudicator will be appointed to resolve any disputes under the contract;

b. the adjudicator is independent of the parties to the dispute;

c.

the decision of the adjudicator is not the final determination of the dispute;

d.

the adjudicator cannot reach a decision on commercial considerations as

opposed to the legal liabilities and obligations of the parties in dispute.

3.

that part of any claim where your right of recovery is restricted by any contract.

4.

your lost profit, mark-up or liability for VAT or its equivalent.

5.

any trading loss or trading liability including those arising from the loss of any

client, account or business.

6

fines and contractual penalties, aggravated, punitive or exemplary damages,

and additional damages under section 97(2) of the Copyright, Designs and

Patents Act 1988 or any statutory successor to that section.

7.

any claim, including arbitration, brought outside the countries set out in the

schedule under Applicable Courts.

This applies to proceedings in the applicable courts to enforce, or which are

based on, a judgment or award from outside the applicable courts

PROFESSIONAL INSURANCE PORTFOLIO - PI ARC Portfolio (2)

We will pay up to the limit of indemnity shown in the schedule unless limited below.

We will also pay for defence costs. However, if a payment greater than the limit of

indemnity has to be made for a claim our liability for defence costs will be limited to

the same proportion that the limit of indemnity bears to the amount paid. You must

pay the relevant excess shown in the schedule.

All claims and losses which arise from the same original cause, a single source or a

repeated or continuing shortcoming in your work will be regarded as one claim. This

includes claims and losses arising after, as well as during, the period of insurance.

1.

2.

For claims arising from dishonesty and from the physical loss or destruction of

or damage to tangible property and from the death, disease or bodily or mental

injury of anyone, the most we will pay is a single limit of indemnity for the total of

all such claims, their defence costs and your own losses. You must pay the

relevant excess shown in the schedule.

The most we will pay for the costs to defend all criminal proceedings is the

amount shown in the schedule. We will not pay any costs awarded against you

as a result of such proceedings. You must pay the relevant excess shown in the

schedule.

At any stage of a claim we can pay you the applicable limit of indemnity or what

remains after any earlier payment from that limit. We will pay defence costs already

incurred at the date of our payment. We will then have no further liability for that claim

or its defence costs.

We will not make any payment under this section:

1.

unless you notify us promptly of the following within the period of insurance

or at the latest within 14 days after it expires for any problem you first become

aware of in the seven days before expiry:

a.

your first awareness of a shortcoming in your work for a client which is

likely to lead to a claim against you. This includes any criticism of your

work even though regarded by you as unjustifiable.

If we accept your notification we will regard any subsequent claim as

notified to this insurance.

b.

any claim or threatened claim against you.

c.

your first awareness of any actual or threatened criminal proceedings

against you.

d.

your discovery, or the existence of reasonable grounds for your

suspicion, that any partner, director, employee or self-employed

individual has acted dishonestly.

PROFESSIONAL INSURANCE PORTFOLIO - PI ARC Portfolio (2)

2.

if, when dealing with your client or a third party, you admit that you are liable

for what has happened or make any offer, deal or payment, unless you have

our prior written agreement. You must also not reveal the amount of cover

available under this insurance, unless you had to give these details in

negotiating a contract with your client or have our prior written agreement.

We will not make any payment for a claim relating to computer records under this

section if you fail to create, maintain and store safely duplicates of all computer

records.

We will not make any payment under this section if you fail to ensure that all work

carried out by self-employed individuals is supervised by a properly qualified

partner or director of yours.

You must disclose to us all fees paid to self-employed individuals working for you

during the period of insurance.

In view of the strict timetable relating to an adjudication YOU MUST NOTIFY US by fax or electronic mail within two

(2) working days of your receipt of any notice of an intention to adjudicate, or of your intention to serve such a

notice which may lead to a claim against you being dealt with by adjudication.

You should make this notification directly to us, and not through your broker, as follows:

Claims Department

Hiscox Insurance Company Limited.

1 Great St Helen’s

London

EC3A 6HX

Fax:

020 7448 6298

Email: hicliability.claims@hiscox.com

We will not indemnify you under this insurance unless you comply with the above.

We have the right, but not the obligation, to take control of and conduct in your

name, the investigation, settlement or defence of any claim. If we think it necessary

we will appoint an adjuster, solicitor or any other appropriate person to deal with the

claim. We may appoint your own solicitor but on a similar fee basis as our solicitor

and only for work done with our prior written approval. Proceedings will only be

defended if there is a reasonable prospect of success and taking into account the

commercial considerations of the costs of defence.