Sometimes the greatest risk lies in what your contract does not say.
Construction contracts state a length of time during which the contractor is liable to return to the handed-over project to compl
ete outstanding or defective work (eg the defect notification period) and if he fails to do so the employer may seek compensation. Beyond that the contractor might expect to be responsible for a defect which becomes apparent over the next few years if the employer is able to prove it arose as a result of his breach of contract.
The contractor might not expect to find himself liable for structural defects in a building for a period of 10 years regardless of whether he is to blame.
The 10 year period of liability following handover is called “decennial liability”. Decennial liability exists as a matter of law and you are unlikely to find mention of it in your contract.
Decennial liability only applies to major defects in buildings or structures: a “total or partial collapse” or what could be considered to “threaten the stability or safety of the building”, but the employer can rely on decennial liability without the need to prove any breach of contract or negligence.
The contractor and designer can be liable but the employer need not be troubled with who is actual responsible for the defect. The employer can claim against both or either of the contractor or designer (leaving them to fight amongst themselves). If one is insolvent the other will be liable for the full amount.
However, if the contractor was not responsible for any design he will only be liable if the defect arose from workmanship (unless he has employed the designer or the defect in the design should have been apparent to him).
If the designer was responsible only for the design and does not supervise the works then he will only be liable for the defect attributable to the design.
The contractor and designer cannot escape liability even if the employer has approved the works or in the event that the defect arose as a result of the sub-surface conditions.
The employer and contractor or designer cannot agree that the liability does not apply, seek to limit it or pass it on to sub-contractors.
This unmentioned risk is not covered by standard Professional Indemnity or Contractor’s All Risk insurances - you may want to consider pricing for a specific insurance policy.