State of the Market – Key Covers, PI & Products Inefficacy

Fire protection contractors operate in one of the most technically and legally demanding sectors in construction. Whether you install fire alarms or sprinkler systems, maintain gaseous suppression systems, carry out passive fire protection works, or service dry and wet risers, the expectations placed upon you, by clients, regulators, principal contractors and insurers, continue to rise. 

With that in mind, this guide outlines the key insurance covers fire protection contractors need, with particular focus on two that are widely misunderstood and frequently underinsured: Professional Indemnity (PI) and Products Inefficacy. 

The Foundation: Core Liability Covers 

Before exploring specialist covers, it is important to establish the core foundations that any fire protection contractor’s insurance programme should include. 

Employers’ Liability Insurance

This is a legal requirement for any business with employees. Employers’ Liability covers claims made by employees who are injured or become ill as a result of their work.  The legal minimum is £5 million, though many contracts require higher limits, and most insurers automatically provide a minimum of £10 million. 

Public Liability Insurance 

Public Liability covers your business against claims for third-party property damage or bodily injury arising from your on-site activities. It is the most commonly required cover in contractor agreements, and for fire protection businesses where work often takes place in occupied buildings and around sensitive equipment.  It forms an essential part of your insurance. 

Contractors All Risks 

Covers damage to contract works, as well as your own plant, hired-in plant, and tools while on site. For fire protection contractors with responsibility for insuring works across multiple projects, it’s an important cover not to overlook. 

Professional Indemnity Insurance: Why It Matters for Fire Protection Contractors 

Professional Indemnity (PI) insurance is one of the most important and misunderstood covers in the fire protection sector. To understand why, it’s important to recognise how fire protection work has changed. 

The Shift Towards Professional Responsibility 

Fire protection contracting has evolved significantly. Where contractors were once primarily focused on installation and maintenance, many now offer a more integrated service, including system design, specification, commissioning, performance assessment, and certification. Each of these activities brings increased professional responsibility, and with that comes risk that a standard Public Liability policy simply doesn’t cover. 

Property damage caused by your physical work is covered by Public Liability.  But if a claim arises from an error in your design, specification, certification or advice, that falls under Professional Indemnity. These are very different exposures, and they need different cover.  

What PI Covers in Practice 

Professional Indemnity typically responds to claims arising from: 

• Errors in system design or specification 

• Incorrect certification of fire protection systems 

• Negligent advice given during surveys or risk assessments 

• Misinterpretation of fire safety standards or regulatory requirements 

• Inaccurate documentation submitted as part of a commissioning process 

Crucially, Professional Indemnity can respond even where no physical damage has occurred. Claims may arise purely from financial loss, for example, the cost of remedial works following an audit, or project delays caused by an error in specification. Standard contractor policies don’t cover these scenarios. 

Scenario 

A contractor certifies a passive fire protection coating as compliant following installation. During a later audit, a building inspector identifies insufficient coverage in several areas. The building owner faces high remedial costs and makes a claim against the contractor. No fire occurred, and no physical damage was caused, but the financial loss is real.  This is exactly the type of scenario where only Professional Indemnity would respond. 

Increasing Regulatory Scrutiny 

The Building Safety Act 2022 has significantly increased the accountability of those who design, install, and certify fire safety systems, particularly in higher-risk buildings. Previously, a contractor might have operated at arm’s length from regulatory exposure, but this Act creates new accountability measures that apply throughout the supply chain. 

Against this backdrop, any fire protection contractor involved in design certification, or signing off on system performance without PI in place, is carrying a potentially significant uninsured risk. 

PI and PL: Understanding the Overlap 

In many fire protection claims, both PI and PL may be triggered simultaneously. Consider a scenario in which a sprinkler system fails to control a fire. The claimant may allege both: 

• That the system failed to perform as intended (Products Inefficacy cover extension under Public Liability) 

• That the design or commissioning of the system was flawed (Professional Indemnity) 

A strong insurance programme should bring these covers together so they work seamlessly alongside each other.  That’s why Darwin Clayton, in partnership with Hiscox, has developed a Fire Protection Contractors Insurance Scheme where Professional Indemnity sits alongside Products Inefficacy and other specialist covers as part of one integrated solution, rather than being added on as an afterthought. 

PI Supports Your Commercial Position 

Beyond protection, carrying robust PI insurance is increasingly a commercial requirement. Main contractors, building owners, and local authority clients regularly require evidence of Professional Indemnity in tender documentation. Having PI in place will: 

• Strengthen your position in competitive tender processes 

• Demonstrate professional credibility and risk awareness 

• Satisfy contractual obligations that would otherwise disqualify you from certain projects 

• Align you with the expectations of BAFE, FIRAS, and other accreditation bodies 

Products Inefficacy Insurance: The Cover Most Contractors Don’t Know They’re Missing 

If Professional Indemnity is frequently misunderstood, Products Inefficacy is often overlooked entirely. Yet for fire protection contractors, it represents one of the most significant financial exposures in the sector. 

What Is Products Inefficacy? 

Products Inefficacy cover responds when a fire protection system, product, or component you’ve supplied, installed, maintained, or modified fails to perform as intended.  

The difference from standard Public Liability is subtle, but important: 

Public Liability covers damage caused by your work. 

Products Inefficacy covers losses where a product or system fails to work as it should. 

In practice, standard Public Liability policies often exclude inefficacy altogether, or include restrictions that mean the cover offers little real protection in the scenarios fire protection contractors are most likely to face. 

Why the Exposure Is Higher Than Most Contractors Appreciate 

When a fire protection system fails during a real fire, it doesn’t just become a products inefficacy issue, the consequences can be far more serious.  Claims can include:  

• Major property damage, often running to millions of pounds 

• Business interruption losses for the building owner or occupants 

• Recovery claims from insurers looking to recoup their costs 

These are some of the most severe losses seen across the construction and contracting sector.  Without inefficacy cover, the financial impact can fall entirely on the contractor’s business.

Scenario 

A contractor services and modifies a sprinkler system in a commercial warehouse. A fire breaks out, and although the system activates, it fails to control the spread due to insufficient water pressure at the modified heads. The property insurer subsequently pursues the contractor for £1.8 million in property damage and business interruption losses. 

While Public Liability responds to damage caused by the work itself, it does not cover a system failing to perform as intended.  This is where Products Inefficacy cover becomes essential.

The Legacy System Problem 

One of the most overlooked risks in fire protection contracting is exposure linked to inherited or legacy systems. Fire protection contractors regularly take on responsibility for: 

• Systems designed and installed by previous contractors 

• Older infrastructure that may no longer meet current standards 

• Components that have been modified, extended, or repaired multiple times 

• Systems with incomplete, missing, or inaccurate documentation 

• Hybrid setups combining historic equipment with new installations 

When a system fails, claimants and their insurers will often pursue the most recent contractor – the business that last serviced, modified, or certified the system.  This means you could find yourself facing a claim where the root cause sits in historic design decisions or ageing components that pre-date your involvement. 

Products Inefficacy cover, working alongside Professional Indemnity, provides vital protection in these situations. It helps ensure you’re not left carrying financial burden for issues you couldn’t reasonably have anticipated or controlled. 

Defending Claims Is Complex and Expensive 

Inefficacy-related claims are rarely straightforward and often take time to resolve.  They typically involve: 

• Expert technical reports on system performance and design 

• Water supply analysis and hydraulic modelling 

• Component and materials testing 

• Assessment of passive fire protection coating coverage and integrity 

• Detailed review of commissioning records and certification documentation 

In these situations, insurer support goes beyond financial backing – technical knowledge is equally critical. Access to specialist claims handlers and expert witnesses who understand fire protection systems can make a real difference to the outcome of the dispute. It’s another reason why sector-specific insurance, rather than a generic contractor policy, is so important.

The Darwin Clayton / Hiscox Fire Protection Contractors Insurance Scheme 

Darwin Clayton, in partnership with Hiscox, has developed a specialist Fire Protection Contractors Insurance Scheme designed to address the full range of risks faced by both  active and passive contractors. It brings together the following covers into one tailored, sector-specific solution: 

Contact Us 

Darwin Clayton has been arranging specialist insurance for contractors for many years. We are authorised and regulated by the Financial Conduct Authority (Ref: 303990), and our advisors have direct experience in the fire protection sector. 

If you would like to review your current insurance arrangements, discuss PI or Products Inefficacy cover in more detail, or receive a quotation under our Fire Protection Contractors Insurance Scheme, please call us on 01892 511144, or contact us to Get a Quote or Request a Callback.