Professional liability insurance for architects and engineers.

Coverages

By on Apr 4, 2017 in All Topics, Coverages, Newsletters, Operations |

By Mark Jackson and Erin Kelley Whether your company owns vehicles or not, chances are you have employees who use their personal vehicles for business purposes. Most design firms are aware that they need proper coverage for automobiles they own, but are less clear about potential liabilities for vehicles they do not own. When your partners, employees or interns use their personal vehicles to run errands or conduct company business, your firm faces “non-owned” auto exposure. In the event of an accident, your firm could be subject to a costly claim. Generally, your employee’s personal auto policy provides the primary insurance, even if the vehicle is used for business. However, if the damages and liability claims exceed the employee’s policy limits, then the injured party will look to your firm’s “deep pockets”. Furthermore, if your employee has a poor driving history, does not properly maintain their vehicle, or does not carry adequate insurance your company could be held liable. There are several steps you can take to protect your business and reduce significant risks to your company’s assets. 1. Purchase Hired and Non-owned Auto Coverage Any company that allows partners or employees to use their personal vehicles while acting in the scope of their employment and in the conduct of their business should have Hired and Non-owned automobile coverage. If your company owns vehicles, there should be a commercial automobile policy in place. We recommend adding Hired and Non-owned coverage if it is not already included. If your company does not own any vehicles, Hired and Non-owned coverage can also be purchased in conjunction with your General Liability. Hired coverage is for situations in which autos are not owned by the company or the driver. It is important to note that Hired and Non-owned coverage generally protects the company only, not the car or the driver. 2. Implement a Company Policy Regarding Automobile Use An effective company policy identifies who can drive on behalf of the business, defines authorized travel and the company’s position on transporting others. All employees who have permission to drive either company-owned or personal vehicles should be required to provide: • Valid Driver’s License. • Evidence of Personal Automobile Liability Insurance proving liability coverage at...

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By on Dec 6, 2016 in All Topics, Coverages, Newsletters |

By Barbara Sable, RLI Insurance THE BACKGROUND It’s an age-old question that defies an answer. The best answer—but not one that makes anyone feel better—is that you’ll know if your professional liability insurance limits are adequate when the worst case scenario claim happens. At first blush, many design firms find this answer extremely frustrating. Professional liability insurance has been available for 60 years. Why has no one been able to create a formula to determine appropriate limits? The answer is that settling or adjudicating claims is as much art as science. We could probably determine an average claim payment for many project types as a percentage of construction values. However, there’s significant fallacy in that analysis for the following reasons: Like many averages, it falls within a very large range of possibilities. If your claim ultimately turns out to be on the high end of that range, the average is now meaningless to you. The breadth of the range is caused by a wide array of factors, the most significant of which include: The state in which the claim occurs. State laws and their interpretation vary widely and substantially impact liability; The type of damages. A claim that involves loss of life or a catastrophic collapse can drive up the indemnity costs, even for a design firm that is only peripherally involved; The chosen dispute resolution mechanism. Mediation, arbitration, and litigation are the most common methods to resolve disputes. Mediation often, although not always, reduces costs. The outcome of arbitration and litigation can be far more risky and far less predictable; The tenacity of the claimant pursuing the claim. A claimant with a vendetta or an unlimited litigation budget can materially increase your exposure; and How much insurance is available through other sources. If your firm turns out to be the only one with available insurance proceeds, you may pay more. Some firms look at that last fact and conclude that they don’t want to be the “deep pocket” or the “lightning rod.” Principals of those firms may not be aware that some claims settle above policy limits, so writing your own check once insurance has been exhausted is well within the realm of possibilities. SO, ARE MY LIMITS...

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By on Sep 29, 2015 in All Topics, Coverages, Newsletters |

By Kevin J. Collins and Willem Van Hemert, P.E., F.NSPE This article originally appeared in The Magazine for Professional Engineers, September|October 2015 Professional liability coverage is the financial protection for professionals against the mistakes they can make while doing their everyday jobs. Just as doctors have medical malpractice insurance to defend themselves against lawsuits, other types of professionals-such as architects, engineers, real estate agents, and technology professionals-need protection in case they make an error or omission on the job. Professional liability insurance is a very important part of the design professionals’ risk management strategy because it provides defense coverage of claims and pays for claims resulting from errors and omissions, in accordance with the terms of the policy. Why do I need professional liability coverage? Even though professionals always try to do their best for their clients, mistakes do happen. And in such a litigious society, lawsuits have become an inevitability. Professional liability coverage not only pays judgment costs, it also prepares you for a lawsuit by paying claims defense costs. After all, even the fraudulent claims cost your business money. With that in mind, the landscape for professional liability insurance coverage continues to evolve. In recent years, there has bene a number of new entrants providing PLI coverage (there are over 50 reported providers of PLI for design professionals), making rates very competitive. But buyers of PLI coverage should be aware that not all policies provide the same coverage and may include some critical exclusions. Here are some key elements that you should be aware of when purchasing your insurance. Coverage Exclusions for Claims Involving: Pollution incidents. Coverage can vary from very broad protection to no coverage. Be aware of limitations on coverage for professional services only, limitations on claims to bodily injury/property damage only (therefore no coverage for economic damages/cleanup costs), and limitations on claims based on project location (no coverage for transportation, disposal); Asbestos; Silica; and Mold. Coverage Exclusions for Certain Types of Projects Including: Wastewater treatment facilities; Nuclear facilities (excluded in almost all policies); Naval architecture; Construction management including at-risk CM, design-build, and other arrangements of CM services; Certain projects involving multifamily housing including condominiums; and Geotechnical services. Coverage Exclusions for Claims from Certain Ancillary...

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By on Feb 12, 2015 in All Topics, Coverages, Newsletters, Operations |

By Erin Kelley, Jackson Collinsworth & Johnson Insurance Agency With a new year full of promise and pipelines once again full, it feels like spring is in the air for design firms for the first time in many years. Changing your organizational focus from growth to damage control is probably not where you want to divert your attention. Yet in light of so much heightened awareness about cyber security we feel this topic is both timely and relevant. Until now, you may not have considered your firm to be the next target for a malicious cyber attack, since you are not in the business of handling large amounts of sensitive medical files, credit card or financial data. But with the reality of today’s fully connected business environment, every company is now at risk. Design firms can no longer expect to be immune to threats once reserved for large corporations only seen in headlines. Small businesses that are less likely to have the infrastructure and the means to protect their data in the same way larger corporations do are increasingly susceptible. In the wake of 2014, the time has come for all businesses to acknowledge and accept that breaches are inevitable. In doing so, business leaders must make cyber security a part of their business plan by identifying the vulnerabilities and implementing a strategy to actively safeguard their assets, employees and customers. Firms that invest time and resources in advance will be better prepared not if, but when a crisis occurs. In order to assist in navigating these murky waters, this article specifically addresses the growing cyber threats design firms face and practical/efficient ways to mitigate these risks. Nearly all companies have Personally Identifiable Information (PII), typically in the form of confidential employee information, stored on their internal networks. But on a day-to-day basis, design firms rely on the availability of critical project data as well as the protection of proprietary intellectual property. With the introduction of digitized technical drawings, CAD, BIM and IPD methods, many design firms are making the move toward virtual collaborative design projects. A data breach can cause project delays and damage your firm’s reputation as well as valuable client relationships. This can have a significant impact...

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By on Jun 16, 2014 in All Topics, Claims, Coverages, Newsletters |

By Erinn Collinsworth at Jackson, Collinsworth & Johnson Insurance Agency Most Professional Liability policies are written on a claims-made and reported basis. For a claim to be covered, several criteria must be met: • You must have a current policy in force; • The professional services must have been rendered after the retroactive date in your policy; • You must report the claim in writing to the insurance company during the policy period (generally within a specified period of time, such as 60 days of first becoming aware of the claim); • In addition, there should be no prior knowledge of this claim. Generally, a claim is defined as a demand for damages, money or services arising from a wrongful act. Further, a wrongful act may be understood to be a breach of professional duty, or more simply stated, an actual or alleged negligent act, error or omission. While some insurance policies interpret that the demand can be verbal, other polices clearly state it must be written. Depending on your specific policy, a claim could arise during a phone conversation with a frustrated client or be as obvious as a registered letter demanding money. In addition to reporting claims, some insurance companies allow, and others require, the reporting of circumstances. A circumstance is when a situation has the potential to turn into a claim – a situation where a reasonable person could expect to receive a future demand for money, services or damages. Some insurance companies provide free pre-claims assistance to help mitigate the issues surrounding circumstances. A pre-claims assistance provision allows the Professional Liability insurance company to assume expenses on your behalf, including involvement of defense counsel. This provision is not subject to your deductible nor does it reduce the limit of liability. Should the circumstance rise to the definition of a claim, at that point, the Design Professional then becomes responsible for the deductible and the policy limits of liability reduce accordingly. So, when is a claim a claim? When is the matter a circumstance? When might pre-claims assistance respond? Florida’s Construction Defect Statute, §558, provides a good sounding board for this discussion as it allows us to address all three scenarios and why your specific policy language...

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By on Jun 10, 2014 in All Topics, Claims, Coverages, Newsletters |

When a project developer sued its engineer that was responsible for the site and grading plan, the engineer’s carrier refused to defend the suit because it asserted the engineer had not provided notice of the claim within the time permitted for reporting under the policy. The developer wrote a letter to the engineer in March stating that the engineer’s slope design failed to follow the recommendations of a geotechnical report and therefore resulted in the parking not draining. The letter concluded by directing the engineer to “develop a plan to correct the drainage problem.” The engineer did not notify its insurance carrier of this letter as a “claim” against it but instead responded by letter to the developer with an explanation that the problems were caused by defective construction rather than defective design. After follow-up meetings with the developer at which the causes for the problem were reviewed, the engineer sent another letter reiterating that the problem was caused by construction defects. After receiving that letter the developer sent a second letter or e-mail to the engineer in the month of May specifically accusing the engineer of design error and chastising him for failure to “accept responsibility.” Three months later (August), the engineer advised its carrier that this May correspondence by the developer constituted a “claim” against him. Subsequently, the developer filed suit against the engineer, as well as the architect and contractor, and the engineer’s carrier refused to defend the suit because the engineer didn’t give timely notice of the claim as required by the policy. The engineer filed suit against the carrier in a separate action for alleged breach of duty to defend it in the underlying litigation. The court in this case (Matkin-Hoover Engineering, Inc. v. Everest National Insurance Company, 2009 WL 1457669 (W.D. Tex., 2009)) denied the insurance carrier’s motion for summary judgment – meaning that the case will go forward on its merits to determine whether the carrier properly declined to defend the engineer. The issue of what communication from the developer to the engineer first constituted a “claim” that the engineer must report to its carrier was carefully analyzed by the court, but it seems to this author that the decision failed to...

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