Design defects are the most disputed point in the CAR world – and the topic where the most half-truths circulate. The honest picture looks like this: CAR is not quality assurance and not a design checker; cover for loss arising from a design defect can be shaped, within limits, by endorsement. Let's look at where those limits lie.
- Correcting or redesigning a defective design is typically never covered.
- Loss to the badly designed part itself is typically excluded by default – an endorsement can bring some of it back in.
- Consequential loss arising from a design defect and affecting otherwise sound parts is typically insurable by endorsement.
- The designer's professional liability is a separate genre: professional indemnity insurance.
The three layers
Picture an undersized beam. The first layer is the cost of redesigning it: CAR doesn't pay this – it's the correction of a design service. The second layer is the defective element itself: replacing the beam is typically excluded by default, because the defect isn't a sudden event but a cause built into the works; endorsements exist that partly reopen cover for this. The third layer is consequential loss: if the beam gives way and destroys the otherwise soundly built floor slab beneath it, loss to that slab is typically insurable by endorsement. There are real differences between levels of endorsement – this is one of the most important rows in a quote comparison.
Why is the genre so strict?
Because insurance is for sudden, accidental loss – the quality of a design, on the other hand, is a question of professional performance. If CAR took on the full risk of a design defect, insurance would end up paying for the designer's diligence. Instead, responsibility stays where it belongs: with the designer, who is covered for this by their own professional indemnity insurance. As a principal, it's therefore worth asking for two things: a design-defect endorsement in the CAR policy, and a certificate of insurance from the designer.
The parallel with workmanship defects
The same logic applies to a workmanship defect: redoing a badly built part yourself isn't an insurable loss, but the consequential loss arising from it typically is. The two types of defect often overlap – in which case, establishing the cause (an expert, documentation) is what decides the claim. That's why the site diary and documentation are worth their weight in gold.
What should you do in practice?
At inception, ask about the level of the design-defect endorsement – don't settle for being told there simply "is one". And in a disputed claim, don't accept a knee-jerk "design defect, we're not paying" as the final word: establishing the chain of causation is professional work, and if the case stalls, I step in to help, where I can, as broker: stalled claims. The full map of exclusions: here.
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