A survey report is relied on long after the surveyor has left the boat. If a buyer, an owner or an insurer believes it missed something, the claim lands on the surveyor, and defending it costs money whether or not it succeeds. Professional indemnity insurance pays for both.
What the codes require
The IIMS Small Craft Code of Practice, which applies to its yacht and small craft surveyor members, requires the surveyor to maintain professional indemnity insurance in force at all times, at a realistic level for the surveyor's work and professional status. It sets no amount.
The duty it insures is set by the courts more than by the policy. ITIC describes it as the due skill and care of a competent surveyor in the circumstances of the case, owed in contract and in negligence. The NAMS guidelines for writing reports add that the standard is set by the accepted practice of surveyors as a group: a surveyor who skips a tool most surveyors use, such as a moisture meter, can be found negligent if that tool would have found the defect.
Winning still costs
Insurance Business reported a claim from ITIC's claims review. A surveyor had inspected the loading and lashing of a yacht carried as cargo on a heavy-lift ship and certified the arrangements. The yacht was lost overboard in heavy weather, and cargo insurers sought to hold the surveyor liable for the full loss, over $5 million.
The claim was first presented nearly six years after the loss, and the insurers then missed the deadline to start proceedings, twice, in two jurisdictions. The courts upheld the time bar. ITIC still funded over $200,000 in legal costs to get there. Its claims director's lesson was to be clear about the scope of the appointment and to document any conditions, because the risk of a claim can remain for years.
How long a survey stays a risk
In England and Wales, the Limitation Act 1980 generally allows six years from the breach for a claim in contract, and six years from the damage, or from when it became known, for a claim in negligence. Other countries set their own periods. Keep your notes, photos and terms for at least as long as a claim could be brought where you work.
What lowers the risk
ITIC's golden rules for surveyors cover most of it:
- Identify the client on day one, and get clear, complete instructions.
- Have terms and conditions that set out who is responsible for what.
- State that the report is only for the intended recipient and use.
- Notify your professional indemnity insurer of any circumstance that could become a claim.
ITIC also warns that oral comments to a client can later be denied, so everything belongs in the written report. A report built from what you said and photographed at each item is the record you'd want if a claim arrives years later. See terms of engagement and codes of conduct.