Following the ten-year liability insurance for real estate projects for architects, engineering firms and contractors, which was made mandatory by the "Peeters-Borsus Law" since 1 July 2018, another insurance obligation has been introduced within the construction sector by the "Peeters-Ducarme Law" effective 1 July 2019.
The title of this law is self-explanatory. It introduces "a professional liability insurance for architects, surveyor experts, safety and health coordinators and other service providers in the construction sector relating to construction works and amends various legal provisions regarding civil liability insurance in the construction sector", as mentioned earlier also called the Peeters-Ducarme Law.
This title shows that this law has in principle a larger scope than the Peeters-Borsus Law. Where the latter applies primarily to contractors and architects in the context of housing projects and for works that require the intervention of an architect, the Peeters-Ducarme Law introduces a professional liability insurance for all intellectual professions within the construction sector, with regard to all construction work.
Consequently, the Peeters-Ducarme Law does not apply to contractors, but it applies to all kind of real estate work (and therefore not only with regard to housing projects). Thus, as a result of the execution of all real estate works, the principal will enjoy this protection regardless of the final destination of the property or the possible intervention of an architect.
Compulsory insurance coverage cannot be lower, per claim, than:
- € 1,500,000 for damage resulting from physical injuries;
- € 500,000 for the total material and immaterial damage;
- € 10,000 for the objects entrusted to the insured by the principal.
The law also provides for a posterior coverage on the basis of which the liability for claims must be covered if the claim is filed within three years after the cessation of the activities of the insured service provider .
Although it could be expected that the Peeters-Ducarme Law has a larger scope than the Peeters-Borsus Law, we must conclude that it is largely eroded by the exceptions that are provided for in respect of the damage that the insurance must cover.
For example, Article 5 of the Peeters-Ducarme Law states that damages are not covered if it is the consequence of a failure to comply with one or more contractual obligations or if damages resulting from environmental degradation, claims relating to an inadequate budget, or disputes in relation to fees and expenses.
These exceptions erode the potentially extensive coverage provided by the Peeters-Ducarme Law significantly and therefore the latter offers less protection than might be expected at first sight.
The Peeters-Ducarme law has been published yesterday (26 June 2019) in the Belgian Official Gazette and will enter into force on 1 July 2019.
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