Professional liability insurance for architects and engineers.


By on Jul 27, 2015 in Alerts, All Topics, Newsletters |

The State of Florida passed House Bill 87 in June 2015 that amends Florida Statute 558 relating to Construction Defects. The original purpose of the Statute was to require a mandatory pre-suit process where, prior to litigation, the claimant (e.g. owner, condominium association) provides written notice of construction defects to the potentially responsible parties (e.g. design professional, contractor). The goal was to allow the responsible parties the opportunity to repair the defects, pay a monetary settlement, dispute the claimed defects, or a combination of these options. If the parties were not able to reach an agreement, then the claimant could initiate litigation. While the basis of this statute is positive – create a process to help prevent litigation – the execution oftentimes lacked clarity and was ambiguous. The updates to this statute, which will take effect October 1, 2015, are designed to make the pre-suit claims process more efficient and transparent for design professionals and contractors. Below is a brief summary of these important amendments: The claimant must now identify the specific location of each alleged construction defect, as well as the specific sections of the building code, project plans, drawings, specifications, or any other documentation that serves as the basis of the claim for the alleged defect. The claimant is not obligated to perform destructive or other testing for the purposes of this notice. The alleged defects can be based on a visual inspection by the claimant. The notice of the claim must identify the information sufficiently to enable the responding party to locate the alleged defect without undue burden. This should be helpful for the design professional. Too often, a party will receive a 558 notice with a laundry list of defects, but no mention of why the claimant thinks the design professional is responsible.  The party accused of wrongdoing is now required to file a written response to the 558 Notice indicating whether they are disputing the claim or if they are willing to attempt to settle. If it is their intention to settle, they must specify through a monetary settlement, providing repairs, or any other method permissible under this section. Insurance companies are now permitted to participate in confidential settlement negotiations prior to litigation to...

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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...

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By on Sep 30, 2013 in Alerts, All Topics, Contracts, Newsletters |

By Samuel Greengard. This article originally appeared in Engineering, Inc., July/August 2013 No engineering project is without risk. Somewhere between the goal of designing the best bridge, building or water treatment facility and running a profitable business lurks the ever-present possibility of litigation. A legitimate disagreement can occur, a company can make a mistake, or a firm or government entity—or a member of the public—can file a lawsuit that forces the firm to defend itself and its work. “A lot of risks exist and they’re not necessarily related to the quality of the work performed,” says John Moossazadeh, a senior vice president at Kleinfelder in San Diego. Engineering firms often take jobs that knowingly expose the firm to legal risk. But how much risk is too much? That’s a question that more and more engineering and design firms are asking when confronted with contracts that contain controversial “Duty to Defend” language. A contractual Duty to Defend provides that the engineering firm will pay for attorney’s fees and costs incurred in a client’s defense of a claim. Depending on the con-tract language and the governing jurisdiction, this duty may be immediate from the time the claim is made, and may exist regardless of whether the engineer is found to be negligent. Although basic indemnification and defense clauses are common, and they typically assign risk to the negligent party, a growing number of developers and agencies request—and, in some cases, demand—that the consultant or firm in charge of the project defend any suit or other legal action brought against the developer or owner, and sometimes even irrespective of whether the claim is related to the engineer’s services. Duty to Defend provisions are therefore criticized because a consultant or engineer who signs such an agreement could be legally required to bear the cost of defending against any project-related claim, even when the claim has nothing to do with the services performed by the firm, and there’s zero evidence of negligence. “It forces engineers to take responsibility for far more than the work they’re being paid to do and what their insurance covers,” explains P. Douglas Folk, principal at Folk & Associates in Phoenix. Fighting Back Recent court rulings have put A/E/C firms...

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