Insurance Archives - Page 5 of 6

Insurance 102: Property Coverages for Architects & Engineers

By Lynda

This issue of ProNetwork News is meant to serve as a basic reference guide to the property insurance coverages typically purchased by design firms. Last month we posted a companion piece, Insurance 101: The Things You Always Wanted to Know About Liability Coverage But Were Afraid to Ask.

We continue our overview of insurance products of interest to design professionals with this review of property coverages that may apply to the needs of your particular practice. As always, we encourage you to ask your broker what insurance is right for you.

BUSINESS PROPERTY INSURANCE

Whether you lease or own your office, you need to insure office equipment, furniture, fixtures, computer equipment, phone systems, fax/copiers, valuable papers and fine arts for fire, theft and water damage. Insuring these valuables for “replacement cost” on an “all-risk form” means that your business is most likely to be reimbursed properly for a covered loss. If you lease furniture and equipment, the lessor will require this coverage and will be designated as a “loss payee.” Landlords of rented property usually require their tenants to maintain property coverage for the rented space to cover improvements and betterments provided to the leaseholder.

Since most design firms are heavily dependent on computer systems, it is important to properly inventory equipment and software.. For example, the cost to reproduce plans and specifications kept on computer files is significant when considering the insured value of valuable papers and records. However, no limit of insurance is a substitute for reliable backup procedures.

Stand-alone IT coverage packages, including security breach, are evolving almost daily. They can cover both first party losses (yours) and third-party losses (those for which you may be liable to others). Ask your broker what products may best apply to your needs.

VALUABLE PAPERS INSURANCE

A/E firms have in their possession valuable papers and documents whose destruction would prove very costly. Maps, plans, specifications and books are some examples. All-risk protection is generally available excluding wear and tear, gradual deterioration and vermin. Certain valuable papers may be insured specifically, or “scheduled.” More commonly, a blanket limit is established to cover all valuable papers. Articles insured on a blanket basis are covered for their replacement cost. Scheduled items are covered on a valued basis even though it is not possible to replace them with like kind and quality. Continue reading “Insurance 102: Property Coverages 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?”

a/e ProNet Holds Annual Meeting in Chicago

By Lynda

Chicago, IL, October 01, 2013 –(PR.com)– This week, a/e ProNet will hold its annual fall meeting at the Embassy Suites Downtown/Lakefront in Chicago. a/e ProNet is a nationwide network of independent insurance brokers specializing in the professional liability needs of architects and engineers.Members from across the country will convene to meet with representatives from several top-tier professional liability insurance companies and discuss changes in the industry, as well as to participate in a number of smaller events.

Over the course of the three-day meeting (October 2—4, 2013), eleven professional liability insurance carriers are scheduled to make presentations: RLI, Travelers, Hanover, AXIS, Catlin, HCC, Liberty, Beazley, Navigators, AllRisk and Victor O. Schinnerer. Each presentation will include information about the insurance company’s products, policy forms and endorsements, claims, risk management offerings, etc.

On Thursday night, a/e ProNet will host a reception for its members and insurance company representatives, as well as members of the Risk Management Committees of NSPE, AIA and ACEC. The reception will be held at The Rookery in Chicago, a space designed by Frank Lloyd Wright.

Established in 1988, a/e ProNet’s member-brokers represent a combined annual professional liability premium volume exceeding $300 million. At this meeting, a/e ProNet will explore the possibility of extending its scope to include Lawyers Professional Liability insurance. To that end, five insurance companies (Beazley, AXIS Capital, Catlin, Travelers and Ironshore) will present on their lawyers’ professional liability insurance program offerings, as well.

Learn more about a/e ProNet

a/e ProNet offers a wide range of Risk Management resources to all design professionals via the a/e ProNet website including: Practice Notes, Guest Essays, ProNetwork News, Contract Concerns, Typical Coverages and Frequently Asked Questions. For relevant industry news and risk management information, you can also follow The ProNet Blog and/or follow a/e ProNet on Twitter.

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”

California Court Upholds Contractual Statute of Limitations Provision in AIA Standard Form

By Lynda

California architects can breathe a little easier. Filed June 3, 2013, the Court of Appeals decision in Brisbane Lodging, LP v. Webcor Builders, Inc. held that the section 13.7.1.1 of the 1997 AIA Standard Form of Agreement between Owner and Contractor is enforceable.

This is good news for Design Professionals, as section 13.7.1.1 shortens the statute of limitations period to four years and effectively abrogates the delayed discovery rule in California.

Per an announcement email recently received from Jacqueline Pons-Bunney, a partner at law firm Weil & Drage:

The case involves a contract between an owner and a contractor for the construction of a hotel. The clause at issue reads:

“any applicable statute of limitations shall commence to run and any alleged cause of action shall be deemed to have accrued in any and all events not later than such date of Substantial Completion.”

Substantial completion at the subject project was July 31, 2000. In early 2005, the owner discovered a break in the sewer line which caused waste to flow under the hotel. It was determined that the plumbing problem was a latent defect. Both the contractor and its plumbing subcontractor investigated the problem and attempted repairs. It was ultimately discovered that the plumbing subcontractor had installed ABS pipe rather than cast iron pipe for the sewer line, in violation of the Uniform Plumbing Code. The owner filed a lawsuit in May 2008. Continue reading “California Court Upholds Contractual Statute of Limitations Provision in AIA Standard Form”

Project Insurance: Benefits and Cautions – Part 1 of 2

By Lynda

The February 2013 issue of ProNetwork News is the first installment of a two-part article; the author, Tim Corbett of SmartRisk explains the origins and principles of project coverage and introduces the reader to two of the four main types of Project Insurance.

Project insurance for design professionals was initially established to provide higher, dedicated limits for larger and more complex projects. The other main driving force behind the development of project coverage was to provide owners the security of having project specific limits both during and after the project was complete. Project insurance has evolved and continues to change based on market needs and conditions, as well as insurance company underwriting standards and “appetite,” or the desire to write certain kinds of risks.

More recently, the collaborative project delivery method sometimes referred to as the integrated delivery (ID) or integrated project delivery (IPD) process has impacted project insurance. In IPD, design professionals are no longer the sole authors of the project design: greater contributions are provided by other entities, including the general contractor and the major trade subcontractors. A few select insurance companies have begun to offer project specific policies tailored to the methods and exposures of IPD.

The key to selecting the correct coverage is theoretically simple: match the benefits of the insurance with the entity or entities requiring the protection. Will one option meet that goal? That’s a very good question: you may need a combination of alternatives to accomplish your insurance and risk management objectives. You should also be aware that even obtaining project insurance has been a challenge in the past, and continues to be so today. Continue reading “Project Insurance: Benefits and Cautions – Part 1 of 2”

2012 Professional Liability Insurance Survey of Carriers

By Lynda

Design firms go through their Professional Liability insurance renewals annually. Did you know the insurance companies actually get reviewed annually, too?

Check out the 2012 Professional Liability Insurance Survey in the Jan/Feb 2013 issue of Engineering Inc. Magazine.

Then-President of a/e ProNet, Leslie Pancoast of IOA Insurance Services, offered the following insights:

One incentive to switch carriers is better risk management services. Her firm might recommend a switch, for instance, if a designer moves into a specialized industry sector, such as condominium design, or if an opportunity exists to lock in a fixed premium for multiple years.
But be careful. Pancoast says that firms that switch PLI carriers too frequently can sometimes find it difficult to find a willing insurer, particularly if a firm begins to experience claims or is driven back to the market by higher billings.
Residential work continues to generate a lot of claims, and schools and other public projects are beginning to experience claims increases.
Best practices for PLI coverage continue to include good communication and proper documentation.

Read the rest of the article to learn the status of the insurance industry.

Just a Rabbit? Small Projects Can Bite

By Lynda

Who doesn’t love a good Monty Python reference? With our latest ProNetwork Newsletter, Just a Rabbit? Small Projects Can Bite, we’ve proven that the classic moments in Monty Python and the Holy Grail can be made analogous to anything, even insurance. Or, more accurately in this case, to potential professional liability claims:

“King Arthur and his knights approach a cave known to be guarded by a ferocious beast. Upon seeing that the beast is but a wee rabbit, they let down their guards, proceed forward and are savagely attacked. Was the mistake having approached the cave at all or having done so without anticipation of the risk and use of appropriate protection? I sometimes ask the same question of design professionals who undertake small fee projects and unhappily receive large claims. But it has always been true that little projects can generate big claims, particularly where we let informality replace careful practice and appropriate documentation. In a troubled economy, a/e’s want to take the work and no responsible lawyer should tell you to minimize your risk by eliminating your work. Take the work but don’t skimp on process, procedures and gut feelings in contract negotiations and documentation, even if done less formally.

Just a Rabbit

“Like King Arthur’s knights, I have frequently heard that the project was just a rabbit, or just a slab on grade, or just a retaining wall, or just a room addition, or just a (fill in the blank). Insurance statistics prove that smaller firms do not necessarily get smaller claims, nor do smaller projects necessarily generate only small claims. A modest structural engineering engagement for balcony maintenance on a condominium building can bring in modest fees. When one of the balconies collapses or defects become apparent in 350 identical units with 350 separate plaintiffs, the defense and repair costs can be astronomical. The same can be true for a small church addition, with the church school remaining open during construction.

Just a Contract

“Aside from legalities, written contracts serve two important practical purposes. First, before work begins, the contract serves as a discussion outline with which a client can be educated about what you do for a living, what they have to give you in order for you to do the work, what work you have in mind and, equally important, what work is not included. All of these topics are much more easily and less emotionally discussed before anyone has started working and before a problem has arisen.

“I frequently receive calls about contracts just as the a/e is finishing Construction Documents and realizes either that nothing has been paid to date or that a risky project is about to go out for bid. This is not ideal, but very common, and still better than having the discussion after CDs are out or a problem has arisen. I also frequently receive calls after the contract is signed, work is proceeding and could I just take a quick look at the contract, because it is “just a room addition” or similar small project? Once signed, there is little I can do but warn the a/e of the teeth on that rabbit.

“Contracts serve a second important purpose as well – to tell a third party (judge, jury, arbitrator, Grand Inquisitor) what the parties thought about the scope of services, risks, rewards and the deal before they got to court. If you show up to court with a contract calling you “contractor,” saying that you will perform your services to the “highest, best” standards of care and that you intended to “ensure” a successful project, you will be hard pressed to proclaim otherwise, even if Mrs. Justaroomaddition was a little flaky and Mr. Justaroomaddition employed his brother-in-law to do some of the work. You will also create insurance coverage problems for the claim, perhaps ending up with two lawyers and two lawsuits instead of one of each. Use the same scrutiny of contract language for your small projects that you use for your large projects, because the same words can cause problems regardless of size of the work.”

Visit our website to continue reading this newsletter. You may download the full PDF version here.

ProNetwork News is the latest value-added resource produced by a/e ProNet. Each monthly edition includes an informative, timely article relevant to the design industry and authored by an industry expert. Contact your a/e ProNet broker for early access to these excellent newsletters.

About the Author: Eric Singer is a partner at Ice Miller, LLP. He concentrates his practice in construction law, with emphasis on the representation of architects, engineers, contractors, owners, and lenders as well as other professionals, in litigation and alternative dispute resolution of design and construction issues. Eric is an active speaker and prolific author on the subject of construction litigation and the liability of the design professional.

a/e ProNet at SDA’s EDSYMPOSIUM12

By Lynda

Longtime design industry advocate, a/e ProNet, announced this week that ProNet President Leslie Pancoast will make a presentation at EDSYMPOSIUM12, the 42nd annual education conference hosted by the Society for Design Administration (SDA), an affiliate of The American Institute of Architects.

For more than 50 years, the SDA has promoted education and best practices for design firm administrative personnel. EDSYMPOSIUM12 will take place from May 2-5 at the Embassy Suites Hotel in Portland, Oregon. a/e ProNet will sponsor Saturday’s luncheon, where Pancoast will make a two-fold presentation: Introduction to a/e ProNet and Professional Liability—Coverages, Nuances and Endorsements. SDA members will learn more about a/e ProNet and its active support for the design industry, as well as receive a brief overview of professional liability coverage and the standard endorsements available from most professional liability insurance providers for architects and engineers.

About Leslie Pancoast

Pancoast has specialized in the insurance needs of architects, engineers and other design consultants for more than 20 years. She is a Managing Partner of Insurance Office of America (IOA), one of the largest privately-held insurance agencies in the country. She is also the Branch Manager of IOA’s San Francisco Bay Area office, operating in California as IOA Insurance Services, which she opened in 2005. Pancoast has earned the designations of Commercial Insurance Counselor (CIC) and Registered Professional Liability Underwriter (RPLU). She has been an active board member of a/e ProNet since 2005, and currently serves as the membership’s President.

About a/e ProNet

Established in 1988, a/e ProNet is a national network of specialist brokers. The group focuses on providing educational resources and risk management services to its members’ clients. Its member brokers represent a combined annual professional liability premium volume exceeding $300 million, giving top-tier insurance companies a major incentive to work closely with a/e ProNet to enhance their various a/e programs.

As well, a/e ProNet makes a wide range of Risk Management resources available to all design professionals via their website, including ProNet Practice Notes, Guest Essays, ProNetwork News, Contract Concerns, Typical Coverages, and Frequently Asked Questions.

a/e ProNet is excited about the opportunity to partner with the SDA in order to provide this value-added educational resource to design firm administrative personnel across the country.

Additional information is available about a/e ProNet by visiting their website, following them on Twitter, and/or Liking their Facebook page.