Professional liability insurance for architects and engineers.

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Moonlighting: What’s the Harm?

Posted on June 1, 2017

Diane Mika, Vice President, Director of Risk Management Education, Berkley Design Professional Consider this scenario: An architect in your firm wants to design a home addition plan for a family member. Or this one: an engineer wants to take on a parking-lot project for a local non-profit organization she volunteers for. They may want the additional experience, income and/or recognition such moonlighting projects may bring. You may think, As long as they do it on their own time, it’s no big deal, right? Not necessarily. It’s not just the designer’s time that’s at issue. There’s a very real potential that your firm could be held liable in the event of a claim related to the moonlighting work. Professional Liability Insurance Your next question may be, But wouldn’t my firm’s professional liability insurance policy cover it anyway? Again, not necessarily. Typically, such policies specify that employees are covered—but only for those services performed on behalf of the firm. Even if your PL insurance policy responds to such a claim, keep in mind that your firm would be responsible for any deductible. In either event, you need to ask yourself this: Do I want to be on the line for paying the cost of a claim on a project for which my firm received no income? What Puts Your Firm at Risk If a claim arises out of a moonlighting project, anything that implicates your firm’s involvement can result in imputed liability against your firm. Any of the following situations might imply that your firm was knowledgeable about and/or sanctioned such work: Employee’s performance of moonlighting services during the firm’s normal work day or on the firm’s premises Moonlighting employee’s use of your firm’s: – Equipment (computers, printers, scanners, plotters) – Software (design technology, other) – Email account domain – Telephone system or company-issued mobile device – Letterhead, logo or other standard documentation What’s more, those who engage in moonlighting tend to be less seasoned employees. This lack of experience, when coupled with the lack of your firm’s normal QA/QC process, creates an environment that is ripe for a claim. Protecting Your Firm Many A/E firms affirmatively prohibit moonlighting activities by addressing it in the firm’s employee handbook and requiring employees to sign a form to indicate that they have read and understood its contents. You may also want to include a disclaimer of liability and, perhaps, an indemnity in the event an employee violates the policy. Be sure to enforce the moonlighting restriction, however, as inconsistency can lead to exposure. In addition to putting your policy in writing and getting it formally acknowledged by your staff, include an actual dialogue about moonlighting during the onboarding and training of new employees. Also consider discussing the topic at an all-employee meeting. Such interactive conversations can help your staff more fully understand the risks of moonlighting—to themselves and to the firm—and help you dispel the myth that there’s no harm in moonlighting. Final Words of Advice A design professional cannot be an effective firm leader and, at the same time, engage in moonlighting activities. Leaders, in particular, need to devote 100% of their professional energy to the firm. Lastly, if you choose to allow non-leadership staff to moonlight, you should place key restrictions on such activities: Cannot be performed on the firm’s premises...

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Using Personal Vehicles While at Work – What are the Risks?

Posted on April 4, 2017

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 or above an established company limit including personal injury and medical limits. • Motor Vehicle Record (MVR) records from the Florida Department of Motor Vehicles. Unacceptable drivers should be prohibited from driving on behalf of your company. Your insurance agent should be able to provide guidance on what criteria constitutes an unacceptable record. Further, you should reserve the right to check employee’s personal auto policy and motor vehicle records annually. 3. Corporate Driving Safety Guidelines Your company policy should include general safety guidelines such as the requirement that drivers obey all driving laws, always use seatbelts, and restrict the use of mobile devices. Formal procedures for handling an accident should be provided to all employees who drive for business. If you do not already have these insurance coverages and guidelines in place, we recommend discussing your needs with an insurance professional who has experience working with design firms. Auto liability claims can be very expensive, especially if injuries are involved. Any type of exposure for your firm, no matter how small, is too big to...

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Electronic Communication – A Blessing or a Curse?

Posted on February 9, 2017

Co-authored By Mark Jackson and Erin Johnson, JCJ Insurance Agency With advances in technology, methods of communication for design firms are quickly evolving. What would have been detailed in a formal letter, transmittal or submittal in the past is now frequently conveyed in an informal, hastily written email. Today, the overwhelming majority of our business is conducted by electronic communication. Electronic communication occurs in many forms, including emails, text messages, and voicemails. Email has become the most common way of exchanging information for design firms. It is not unreasonable to think that text messaging will soon be equally prevalent. While emails and texts are convenient, firms need to treat them like other formal means of communication. Emails and texts are fast and effective, which is a benefit in today’s face-paced environment. Not only are you able to communicate quickly but you can also include numerous individuals in the messages. With the use of mobile devices, correspondence is often casual and, if you respond while waiting for an appointment or at a jobsite, can be carelessly written. It is crucial that everyone on your team understands that in a court of law, electronic communications are legal, permanent, and discoverable. A disclaimer that “this was sent from my iPhone” does not make the document less valid. One poorly drafted email or text can have a very negative effect on the defense of a firm should a dispute arise on a project. Email When drafting an email, take time to consider what you want to communicate. An email should be no different than a formal letter in regards to the content. Before sending an email, ask yourself if you would put these exact words on the firm’s letterhead with your signature. If you hesitate, reconsider what you write. Your emails need to be prepared and suitable for presentation in any forum. An offensively written email or admission of fault can pose significant risk to the firm in the event of a dispute. A firm’s ability to defend itself for a professional liability claim is weakened when, during discovery, there are emails that are unprofessional, disrespectful, insulting, or contain an admission of fault. Emails should never include negative comments about the owner, contractor, or other members of the design team. Any email that disparages other members of the design team can be used to build a case that your firm was not acting within a reasonable Standard of Care. Again, the question that should be asked before hitting the send button… “Would I be willing to put this content on the firm letterhead with my signature?” This applies to both emails that are sent internally to members of your team and emails sent to other parties. You should never write anything in an email that you would not want forwarded to your boss, spouse, parent, or read in front of a jury. Text Message A text message carries the same weight as any other type of written communication. They can be just as damaging if they are unprofessional or contain an admission of fault. Likewise, they can help firms in the defense of a claim if they provide proof of a client’s instruction or opinion. Since text messaging is a relatively new way for firms to communicate and it is not as recoverable as...

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Benefit from Selecting the Right Professional Liability Broker

Posted on January 25, 2017

By Audrey Camp Reprinted by permission of the National Society of Professional Engineers, 2016. Original article appeared in the March 2015 issue of PE Magazine. Carefully selected and advantageously used, your broker can be as important to the management of your practice as your accountant or your attorney. Poorly selected and ill-equipped to advise you on the risks of professional practice, your broker may add little more of value to what you do than the cost of a few postage stamps at renewal time. The choice is yours. — Dave Lakamp, founding member of a/e ProNet For design professionals, finding the right insurance broker can present a challenge. You need someone with ample experience handling the professional liability needs of architects and engineers, and who offers a wealth of value-added services. Only if your broker has a comprehensive understanding of what you and your firm are all about can he or she be of real use to you. Lacking this knowledge can leave your firm vulnerable in a shifting insurance marketplace. A good specialist broker is committed to investing the necessary time and resources to your account. They find you the best coverage for the best price, and they save you the considerable time it would take for you to do so on your own. What is professional liability insurance and why is it important? A professional liability (errors and omissions) insurance policy provides coverage to defend and indemnify a professional firm against claims alleging negligent acts, errors, or omissions in the performance of professional services. Any project can give rise to a claim. Even if your firm employs an excellent risk management strategy, it is vulnerable to being named in a lawsuit. The cost of that defense can mount fast, even if your firm wasn’t in the wrong. A professional liability policy covers the cost of defense. In the event that your firm is found negligent, and that the firm’s negligence gave rise to the claim in question, your professional liability policy will cover your firm for the damages you’re legally obligated to pay, up to the policy limit. (Note: In most cases, defense costs erode the policy limit. Having adequate limits to cover both defense and indemnity is important.) Why do I need a specialist insurance broker? Shouldn’t I be able to purchase my professional liability policy directly from an insurance company? For architects and engineers, maintaining an active and adequate professional liability insurance policy is very often a legal requirement. And while a basic professional liability policy is straightforward enough for anyone to acquire, the insurance needs of design professionals are more complex than that. The insurance industry is full of companies who want your business, but no two professional liability insurance carriers are exactly alike. Among the major differences are: the size of policy limits offered; whether multiyear policies are available; underwriting appetites for types of engineering services; and claims service. Some companies require a 10-year loss history from design professionals, while others only require a five-year loss run. A specialist broker knows what the markets are doing, who the underwriters are, and how to present your firm in the best possible light. The cost of your insurance depends on this knowledge and attention to detail used on your behalf. Here it should be noted...

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