ProNetwork News

Professional liability insurance is a necessary business expense. The professional liability policy provides the design professional with a sense of financial security against errors and omissions. The policy also provides project owners and contractors with a level of comfort that a “deep pocket” will be available for any additional project costs caused by professional negligence. Too often project professionals, owners and contractors consider the purchase of the professional policy to be sufficient for ensuring negligence coverage.

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.

Continued from the August 2016 issue of ProNetwork News including an analysis of Beacon Residential Community Association v. Skidmore, Owings & Merrill LLP, et al. and its impact on future court decisions. This newsletter includes the following important contract provisions: Indemnity, Waiver of Consequential Damages, Limitation of Liability, No Third-Party Beneficiaries, The Certification of Merit, and Provisions Requiring the Developer and Subsequent Owners to Include Maintenance Requirements and Manuals in CC&Rs and Purchase Agreements.

Do architects owe a “duty of care” to the homeowners of a condominium project with whom the architects have no contractual privity?  According to the California Supreme Court, they do.  What does this mean in practical terms?  The answer is that architects are now more than ever exposed to potential future claims and lawsuits brought by homeowners and the homeowners’ associations years after the project has been completed even where the architect’s design decisions are trumped by those of the project developer, and the architect’s role in the construction phase of the project is limited.

Design professionals are often asked by their clients to sign contracts that include comprehensive—sometimes unreasonable—insurance requirements and indemnification terms.  These are usually drafted with the goal of protecting owners, clients, contractors, or other project participants.  But how does this work when the required coverages aren’t found in the commercial insurance marketplace?