Professional Liability Insurance to Become Mandatory for Engineers and Construction Businesses

Kathmandu — Engineers, construction companies and other technical professionals involved in building construction will face personal liability if accidents occur or structures are weakened by technical errors, negligence or carelessness.

A bill drafted to amend the proposed Building Act, 2055 introduces stricter liability provisions for technical professionals and construction businesses, including a requirement to hold professional liability insurance. The bill also proposes disciplinary action and license cancellation by the relevant authorities in cases of serious negligence or violations of professional codes of conduct.

Section 10A of the bill clarifies and strengthens the responsibilities of parties involved in building construction. It requires individuals or institutions responsible for designing or supervising buildings of the classes or types specified under Subsection 99 to obtain professional liability insurance.

The bill also proposes that building owners, and individuals or institutions undertaking construction, obtain “construction risk insurance,” as prescribed, to reduce the risk of accidents during construction.

Together, these provisions would create a mechanism for managing, through insurance, the financial risks arising from technical problems in building construction and from accidents that may occur during the construction process.

Insurance Will Not Exempt Professionals from Liability

Holding professional liability insurance will not give engineers, designers or construction businesses legal immunity for their mistakes. Section 14A of the bill provides for professional and regulatory action to ensure stricter oversight of their conduct and responsibilities.

Under the proposed provision, if a designer, construction business, supervisor, evaluator or other technical professional involved in building construction is found to have failed to comply with the building code or to have violated professional standards, the local government or urban development office may recommend action against them, along with supporting evidence.

The bill requires such cases to be forwarded to the relevant professional council, licensing authority or regulatory body for action under prevailing laws.

Once a case is referred for disciplinary action, the concerned regulatory body must take the necessary action and inform the authority that made the recommendation, as stipulated by Subsection 92.

The provisions are expected to make technical professionals and businesses involved in building design, construction, supervision and evaluation more accountable for their work. Professional liability insurance and construction risk insurance are also expected to play an important role in managing the financial risks arising from technical errors and accidents in building construction.