Professional Fees Clause
The professional fees clause covers the necessary fees of architects, engineers and other professionals incurred in planning and supervising the reinstatement of property following an insured loss.
- Clause type
- Extension
- Origin/Market
- International programme
- Favours
- Insured
- Negotiability
- Market standard
Purpose
Rebuilding a damaged building or plant regularly requires engaging architects, structural engineers, surveyors or legal advisers, whose fees are incurred in addition to the pure construction and materials cost. The professional fees clause makes clear that such necessary professional fees form part of the indemnity rather than having to be borne separately by the policyholder.
Effect and limits
Cover reimburses fees necessarily incurred in planning, tendering and supervising the reinstatement of the damaged property, usually assessed by reference to the professional scales or rates prevailing at the time of the loss. Reimbursement is generally capped by the property loss and the sum insured agreed for that item, and does not cover the cost of preparing the claim itself (for example loss-adjusting or public-adjuster fees), which may need to be covered under a separate provision. For smaller losses, a question can also arise as to whether external professionals are genuinely “necessary” within the meaning of the clause where a straightforward repair without design input would suffice.
Negotiation and practice
For complex or listed properties whose reinstatement requires substantial design input, it is worth checking whether the agreed sum insured realistically reflects the fees likely to be incurred. The distinction from claim-preparation costs (loss-adjuster or public-adjuster fees for establishing the claim) should be clarified up front, since these are generally not covered by the professional fees clause but by separate provisions.