Professional liability insurance for architects and engineers.

Limitation of Liability Victory for Design Professionals

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By on Feb 6, 2014 in Alerts, All Topics, Newsletters |

On Wednesday, April 24, 2013, Governor Rick Scott signed into law SB 286, relating to Design Professionals and known as the Fairness in Liability legislation. Beginning July 1, 2013, design firms will now be allowed to negotiate contracts that protect their professional employees from being sued individually.

The new law grants design professional employees immunity from liability for economic damages resulting from negligence occurring during the course and scope of a professional services contact. The law does require that the design firm maintain any professional liability insurance required under the contract. The new law also extends to individuals the protection of contractual limitation of liability clauses. This comes four years after the courts ruled that individual professional employees were not protected by limitation of liability clauses in a contract.

In 2009, A Florida appellate court found that the limitation of liability clause in a contract between a design firm and its client cannot be applied to limit the liability of an individual professional that is an employee of the firm. “A cause of action in negligence against an individual professional exists irrespective, and essentially independent of a professional services agreement,” said the court. A judgment in excess of $4 million against an individual engineer was allowed to stand because the court held the Limitation of Liability in the design firm agreement did not apply to actions directly against individual employees, and that even if the clause were applicable to individual employees it would be unenforceable as contrary to law.

Design professional should take advantage of the benefits of this new law. Your contracts should be amended to include language that an individual employee cannot be held liable for negligence. Individual employees should not be named as a party to the contract. All professional services contracts should be made between the client and the business entity.

Please let us know if you have any questions or need additional information.