An interior design firm wins a new residential project. The clients are engaged, the design is signed off, and the renovation contractor is on board. Three weeks into hacking works, a vibration crack appears in the neighbour's unit. The neighbours are unhappy. They want someone to fix it. The homeowner looks at the interior design firm. The firm looks at the contractor. The contractor says it was within normal vibration parameters.
Who pays?
For most Singapore interior design firms, this scenario is not a hypothetical. It is a question they have not fully answered before the incident occurs. The answer depends on how the project's insurance is structured, what the ID firm's own professional liability position is, and whether the contractor's CAR policy names the right parties.
What interior design firms actually do and why it creates liability
An interior design firm in Singapore provides professional design services, coordinates renovation works, manages contractors and subcontractors, procures materials and fittings, and supervises the execution of the design on site. In many residential and commercial projects, the ID firm is the single point of accountability for the client.
This role creates two distinct categories of liability that need to be addressed by two distinct categories of insurance.
The first is professional liability: the liability that arises from the design itself, from the advice given, from the specifications produced, and from the coordination and supervision of the works. If a design error leads to a structural problem, if a material specification proves inadequate, if the coordination of trades leads to a sequencing failure that causes damage, or if the supervision of works falls short of the expected standard of care, the ID firm carries professional liability for those failures.
The second is site liability: the liability that arises from the physical renovation works being carried out on site. Damage to the client's property, damage to neighbouring properties, injury to third parties, and damage to the works themselves during construction all fall within this category. This is what Contractor's All Risk insurance addresses.
Who holds the CAR policy and what it covers
In most Singapore residential renovation projects, the CAR policy is taken out by the renovation contractor, not by the interior design firm. The contractor is the party executing the physical works, and the CAR policy covers the works under construction and the third-party liability arising from those works.
However, the structure of the CAR policy matters significantly for the interior design firm. Two questions are worth confirming on every project.
First, is the interior design firm named as a joint insured or additional insured on the contractor's CAR policy? Where the ID firm is coordinating the works and the client holds the ID firm accountable for the project outcome, a CAR policy that covers only the contractor leaves the ID firm unprotected if a claim is directed at it rather than at the contractor.
Second, does the CAR policy's third-party liability section cover claims arising from vibration, weakening of supports, or removal of support to adjacent properties? These are the exclusions that are most commonly triggered in dense urban renovation environments like Singapore HDB blocks and shophouses. The vibration crack scenario at the opening of this post falls into this exclusion category on a standard CAR policy unless the exclusion has been specifically removed.
For interior design firms managing renovation projects, confirming these two points with the contractor before works commence is a practical step that changes the firm's position if a claim arises during the project.
Professional indemnity insurance for interior design firms
The CAR policy addresses site liability. It does not address the professional liability that arises from the design and advisory role of the ID firm.
Professional indemnity (PI) insurance covers claims made against the firm for acts, errors, or omissions in the provision of professional services. For an interior design firm, the professional services covered include the design itself, the design drawings and specifications, the advice given to clients on materials, finishes, layouts, and structural changes, and the coordination and supervision of the renovation works.
A client who suffers a financial loss as a result of a design error, an inadequate specification, or a coordination failure has a professional negligence claim against the ID firm. The PI policy covers the legal costs of defending that claim and any damages or settlement amounts awarded, up to the policy limit.
Two specific scenarios are most relevant for Singapore interior design firms.
The first is a design error that results in works needing to be redone. If a specification calls for a tile that is subsequently found to be incompatible with the substrate, or a layout that requires revision after works have commenced, the cost of rectification is a potential PI claim if the error was the firm's.
The second is a coordination or supervision failure that results in damage. Where the ID firm supervises the works and an error occurs during a trade sequence that the firm was overseeing, the professional liability for that oversight sits with the firm, separate from the contractor's CAR liability for the physical works.
PI policies for interior design firms in Singapore are written on a claims-made basis. The policy that responds is the one in force when the claim is made, not the policy in force when the design was produced. A firm that has completed a project and allowed the PI policy to lapse has no coverage for a claim that arrives after the policy has expired.
Public liability for the ID firm's own activities
An interior design firm that conducts site visits, brings clients to show flats or material showrooms, meets subcontractors on active worksites, and operates from its own studio or office carries public liability exposure separate from the contractor's CAR liability.
A client who is injured during a site visit, a third party who is injured at the firm's studio, or a subcontractor whose equipment is accidentally damaged by the ID firm's own personnel has a public liability claim against the ID firm rather than a claim under the contractor's CAR policy.
Public liability insurance for the ID firm covers the firm's legal liability for accidental bodily injury to third parties and accidental damage to their property arising from the firm's business activities and premises.
What the BCA and contractual framework means for ID firms
Singapore's Builders Licensing Scheme, administered by the BCA, requires licensed building contractors to hold appropriate project insurance. Interior design firms that operate as the main contractor for renovation works, or that hold a BCA builder's licence, are subject to the requirements that apply to contractors.
For ID firms that do not hold a BCA licence and do not act as the main contractor, the BCA licensing requirements do not apply directly. However, the contractual requirements of each project still govern what insurance the firm must hold. A commercial project client or a developer client may specify PI and public liability insurance as conditions of engagement, regardless of whether BCA requirements apply.
You can read more about our professional indemnity cover, public liability cover, and CAR cover on the products page. Our post on Contractor's All Risk Insurance in Singapore covers the CAR policy structure in more detail.
If you are an interior design firm or renovation contractor in Singapore and would like to understand how professional indemnity, public liability, and CAR cover work together for your specific project structure, we would be glad to work through it with you.
This article provides general information only. It is not insurance or legal advice. Policy availability, terms, conditions, and exclusions vary by insurer and product, and cover is subject to the full policy wording. Please contact TZY CO for advice on your specific situation.