Initiatives for obligatory professional liability insurance for contractors

Initiatives for obligatory professional liability insurance for contractors

In a policy statement of 13 November 2014, Federal Deputy Prime Minister Kris Peeters - responsible for (amongst other things) the economy and consumers - once again raised the idea of introducing an obligation for construction contractors to have professional liability insurance. Since then, however, no further specific legislative initiative has been taken on this.

Prior to that, on 25 September 2014, a bill had been submitted in the Chamber of Representatives by Mrs Leen Dierick and several other Members of Parliament, namely the “bill on professional liability insurance for contractors of construction works” (no. 54K0334). This is an adapted version of bill no. 5-112/1 that had been submitted earlier in the Senate. It expressly refers to the 12 July 2007 decision of the Constitutional Court, in which the Court held that there is an unlawful inequality of treatment between architects, on the one hand, and all other participants in the construction process, on the other, due to the fact that Belgian law obliges the former to insure their professional liability, but not the latter. In this decision, the Constitutional Court expressly stated that it was up to the legislature to rectify this discrimination.

The bill contains a very broad definition of the concept of "contractor", so as to cover all possible categories of construction work contractors. It would define a contractor as: "any natural person who or legal entity which undertakes in exchange for the payment of a price, in complete independence, yet  without power of representation, to perform certain construction work for another by engaging in material activities".

The bill then provides an obligation to conclude a professional liability insurance policy for such categories of construction work contractors as shall be designated by the King. The King will also have to define the concrete terms of such insurance, such as the minimum coverage, its application over time, the risks that have to be covered, the exclusions and the amount of any excess. The bill provides that this obligatory insurance may be incorporated into an insurance policy covering all parties involved in the worksite.

Inspired by the sanction for violation of the law imposing obligatory insurance on architects, this bill contains a penal sanction for failure to comply with the contractor’s future obligation to insure his professional liability (art. 4). The bill also provides – again, as for architects - for the contractor-legal entity to bear joint and several liability together with the directors, members of the executive committee and more generally all independent mandatories, for the payment of the premiums. The bill thus provides for joint and several liability vis-à-vis third parties on the part of the directors and members of the management committee of the legal entity for any debt deriving from the ten-year liability, in the event of violation of the obligation to contract such liability insurance.   

At present, however, contractors are still not obliged to get such insurance, as this bill of 25 September 2014 remains pending before the Chamber of Representatives, waiting to be dealt with by the competent committee. There is a chance that it will be replaced by a new bill coming from the government if Deputy Prime Minister Kris Peeters acts on the intention expressed in his policy statement.

In the meantime, both the Flemish Construction Union and the Belgian Construction Confederation have already reacted with caution, noting that such obligatory liability insurance shouldn’t be introduced hastily, but only after detailed discussion with all of the parties involved. We will of course be closely monitoring all further developments.

For more information on this subject, you can consult Siegfried Busscher (the author and head of department).