Insurance 101 for Architects & Engineers Archives - Page 3 of 3

Natural Disasters: Earthquake and Flood Protection for Architects & Engineers

By Lynda

In an effort to demystify some of the concepts and to provide a ready reference, a/e ProNet gathered some of its finest insurance minds and put together this list of typical coverages for design professionals. This is not intended to be an exhaustive source of information but rather a primer designed to answer basic questions and to put the reader on the right track if more information is needed. Today, we’ll touch on Earthquake insurance and Flood insurance for Architects and Engineers:

EARTHQUAKE COVERAGE

Earthquake hazards in the United States are commonly associated with Western States and in particular California, however in past history, significant earthquakes have occurred on other states including South Carolina, Missouri, Ohio and Alaska. Because in the mid-states of the US a significant earthquake hasn’t occurred for more than 100 years, people have become very complacent about a reoccurrence. Some experts say it’s not a matter of “if” but “when.” As a result of this casual attitude, a high percentage of real and personal property is not currently insured for this hazard. A further concern is that building structures in these mid-state areas are not constructed to resist earthquake damage such as most new construction in California and other western states are. Keep in mind that loss is not limited to the direct damage to property. Severe earthquake may interrupt public transportation, damage roads and bridges that prevent the movement of private vehicles. Many utilities including electricity, water, fuel gas, and sewage may be interrupted for long periods of time. Every firm would be well served to investigate Earthquake Coverage for their building and contents coverage, even though the risk of loss seems remote.

Most Earthquake coverage is written on a “Difference in Conditions” insurance form, attached to standard property policies. This form originally included a multitude of “All Risk” coverages offered with earthquake added as an insured peril. The evolution of this coverage form has changed the focus to coverage from “All Risks of Loss” to focus on earthquake, Sprinkler Leakage, and Flood and does not include landslide, subsidence or soil movement unless it is caused by Earthquake. Continue reading “Natural Disasters: Earthquake and Flood Protection for Architects & Engineers”

Why should Architects & Engineers use a specialist Insurance Broker?

By Lynda

At our fall meeting last month, a panelist asked an important question:

Why is an insurance broker necessary for design professionals? Shouldn’t architects and engineers be able to access insurance companies and purchase Professional Liability policies directly?

Members of a/e ProNet are professional, independent brokers who serve the insurance needs of design professionals. Membership in our association is by invitation only, and members must be experienced and have a minimum number of design professional clients, as well as a minimum amount of premium volume. Our members must also provide their clients with services beyond the sale of a professional liability policy.

In addition to knowing the professional liability marketplace, they negotiate the best product at the best price for their clients. That negotiation happens every year at renewal time, and because our members are independent—not obligated to any one insurance company—they are in the best position to compare and contrast policies. Often, the time and expertise this process requires is underestimated by A/E clients. With a specialist broker, the A/E can rest assured that they have an advocate annually, both in relation to their bottom line and their exposure as a professional in a demanding and risky environment.

Most importantly, though, that advocacy doesn’t end when the renewal has been processed. The rest of the year, our members’ clients can count on their specialist brokers to provide services such as contract review, accredited continuing education, and other risk management services. Continue reading “Why should Architects & Engineers use a specialist Insurance Broker?”

Insurance 101: The Things You Always Wanted to Know About Liability Coverage But Were Afraid to Ask

By Lynda

This issue of ProNetwork News is meant to serve as a basic reference guide to the liability insurance coverages typically purchased by design firms.

Let’s start with a key definition.

CLAIMS-MADE vs. OCCURRENCE

Most liability policies are written on an Occurrence policy form. Coverage is triggered on the date of the “occurrence” (defined as an accident, including continuous or repeated exposure to substantially the same general harmful conditions, causing damage). A claim asserted against the insured may be brought well after the occurrence.

In contrast, professional liability claims are often brought many years after an alleged act, error or omission. Insurance companies had to evaluate their exposures and better determine the premium necessary to cover such risk, so the Claims-Made policy form was created. The coverage trigger is the date the claim is made, and coverage applies only to alleged wrongful acts that happened after the retroactive date of your policy. Once the policy is canceled or not renewed, all coverage will cease.

Today, virtually all professional liability policies are provided on Claims-Made forms. In order to establish coverage, three conditions must be met:

a policy must be in place at the time a claim is made
the “retroactive” or “prior acts” date on the policy must be dated at least as far back as the services giving rise to the claim were provided
notice must be provided to the insurer within the policy term or during a specified grace period

The advice of your insurance advisor is essential when reviewing Claims-Made policies with respect to mergers, acquisitions, splits and retirement.

This has been an excerpt of the May 2013 issue of ProNetwork News. The newsletter goes on to deal with all types of liability coverage, including Professional Liability Insurance, Commercial General Liability Insurance, Owners and Contractors Protective Liability Insurance, Workers’ Compensation and Employers Liability Insurance, Umbrella Liability Insurance, Employment Practices Liability Insurance, Directors and Officers Liability Insurance, and many more! Download the full PDF version of the newsletter here. Continue reading “Insurance 101: The Things You Always Wanted to Know About Liability Coverage But Were Afraid to Ask”

Insurance 101: General Liability, Commercial Property & the Business Owners Package Policy

By Lynda

Most architects and engineers are required to have General Liability and Business Property insurance coverage. The former shows up in most design contracts, while the latter is an essential part of a design firm’s office lease agreement.

Needless to say, we get several common questions regarding these coverages:

What is General Liability coverage? What is Business Property coverage? What’s the difference between these coverages/policies and a Business Owners Package (BOP) Policy?

In an effort to demystify some of the concepts and to provide a quick reference a/e ProNet gathered some of its finest insurance minds and put together this basic manual: Insurance 101 for Design Professionals. This is not intended to be an exhaustive source of information but rather a primer designed to answer basic questions and to put the reader on the right track if more information is needed. a/e ProNet strongly recommends that the reader seek advice from an agent or broker specialist who is best equipped to understand the exposures to loss of each individual design firm.

The following is an excerpt from our Insurance 101 page, specifically defining General Liability, Business Property, and Business Owners Package (BOP). Access the full set of policy and coverage terms on our website.

COMMERCIAL PACKAGE AND BUSINESS OWNER PACKAGE POLICIES

Insurance companies will combine frequently requested coverages under one economical package known as Commercial Package Policies or Business Owners Policies (BOP). One policy is designed to include among other coverages:

General Liability
Commercial Property
Non-Owned/Hired Automobile
Valuable Papers and Records
Business Interruption/Business Income Equipment Breakdown
Accounts Receivable

BOPs tend to be prepackaged policies available to smaller firms with little flexibility (other than limits) on available coverages. Commercial Package policies are offered to larger firms and provide a wide range of coverage options. Insurance companies that offer these policies to design professionals may require the insured to maintain professional liability insurance as a prerequisite to obtaining a package policy. Continue reading “Insurance 101: General Liability, Commercial Property & the Business Owners Package Policy”