Lessons Learned: A Travelers Risk Management Resource for Architects & Engineers

December 04, 2014

umbrellaWhat sets top-tier Professional Liability insurance companies apart from the rest are their risk management resources. These can include webinars and pre-claims assistance, which are usually made available only to their insureds. Other examples are contract review guides and newsletters. Travelers is one of the longest standing carriers of Professional Liability insurance (or Errors & Omissions insurance) for architects and engineers, and it makes several excellent resources available to all design professionals. In case you need a reason to visit their website, we suggest checking out their Lessons Learneda series of examples of claims causing loss and recommendations to mitigate risk in the future related to the type of loss. We pulled a recent one up to give you a taste!

The Incident

An architect contracted to provide design services for a retirement complex in the southwestern United States. In an effort to control costs, the owner chose not to retain the architect to perform construction phase services.

Upon project completion, the residents started complaining about various quality issues, including water intrusion, flashing problems and cracking stucco exteriors. The owner hired a forensic engineer who found numerous construction defects.

While many of the problems appeared to be construction related, the architect came under fire for failing to specify two layers of building paper as part of the exterior wall design. There was some question whether the architect, by specifying a single layer, had violated the local building codes.

The case failed to settle in mediation and went to arbitration.
During the three weeks of testimony, there were long debates about whether the contractor was required to provide one or two layers of building paper. The contractor argued that the specifications were confusing, which led to the installation of the single layer. The architect took the position that the specifications required the contractor to comply with applicable code requirements, which took precedence over the specified single layer of building paper.

The arbitration proceedings closed and the arbitrator rendered her decision. The architect was ordered to pay the owner in the
range of $500,000.

Lessons Learned

1. Construction Phase Services – Limiting or eliminating the design professional’s involvement during construction can be problematic. Many questions relating to the design intent can arise during construction. Keeping the design team on the sidelines can lead to problems during construction.

2. Specification Ambiguity – Clearly written specifications are important. Ensure that the specifications make sense. Have the specifications reviewed by someone who is unfamiliar with the project. As the author of the specifications, ambiguities most often become the design professional’s problem.

For more information, visit our Web site, contact your Risk Control consultant or email Ask-Risk-Control@travelers.com.

rmplusonline.com / Travelers Casualty and Surety Company of America and its property casualty affiliates. One Tower Square, Hartford, CT 06183
The information provided in this document is intended for use as a guideline and is not intended as, nor does it constitute, legal or professional advice. Travelers does not warrant that adherence to, or compliance with, any recommendations, best practices, checklists, or guidelines will result in a particular outcome. In no event will Travelers or any of its subsidiaries or affiliates be liable in tort or in contract to anyone who has access to or uses this information. Travelers does not warrant that the information in this document constitutes a complete and finite list of each and every item or procedure related to the topics or issues referenced herein. Furthermore, federal, state or local laws, regulations, standards or codes may change from time to time and the reader should always refer to the most current requirements. This material does not amend, or otherwise affect, the provisions or coverages of any insurance policy or bond issued by Travelers, nor is it a representation that coverage does or does not exist for any particular claim or loss under any such policy or bond. Coverage depends on the facts and circumstances involved in the claim or loss, all applicable policy or bond provisions, and any applicable law. © 2014 The Travelers Companies, Inc. All rights reserved. Travelers and the Travelers Umbrella logo are registered trademarks of The Travelers Indemnity Company in the U.S. and other countries. Doc#: LL1202 Rev. 3-14

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