This week, 46 a/e ProNet members from 27 member agencies are expected to attend our annual meeting in Chicago, Illinois. Over the course of two and half days, twelve top-tier Professional Liability insurance companies will present to our membership. Each company will take this opportunity to announce policy form changes, new endorsements, and pricing expectations for the coming year; as well, they will alert us to industry trends surrounding claims and risk management.

Because a/e ProNet brokers are independent, that-is, not tied to any single insurance company, the insurance companies sending representatives to this event know that they are in competition for our business. It is in their best interest to make their programs as comprehensive and beneficial  to our clients as possible. The companies attending this event include: RLITravelersVictor O. SchinnererLibertyBeazleyCatlinHCCHanover, Navigators, Insight, All Risks, and AXIS.

Our Thursday night reception for members and insurance company representatives will be held at a new venue this year: The Grand Army of the Republic (GAR) Rotunda at the Chicago Cultural Center.

Our clients are architects and engineers, and we appreciate what they do today, as well as what they have created in the past. We chose the Chicago Cultural Center, opened in 1897, because it is “one of the city’s most popular attractions and is considered one of the most comprehensive arts showcases in the United States.” In other words, it’s beautiful! A Chicago landmark, located in the Loop, across Michigan Avenue from Millennium Park, the GAR Memorial consists of a large hall and rotunda in the north wing of the building. The hall is “faced with deep green Vermont marble, broken by a series of arches for windows and mahogany doors. The rotunda features 30-foot walls of Knoxville pink marble, mosaic floor, and a fine, stained-glass dome in Renaissance pattern by the firm of Healy and Millet.”

If you have questions about this meeting, or a question about a/e ProNet, don’t hesitate to contact us. You can also find your local a/e ProNet broker through our website.

Other than Professional Liability claims, Auto Liability claims are the largest exposure faced by Architecture and Engineering firms.

If your design firm is small to mid-sized, often “a standard BOP (Business Owner’s Policy) is sufficient to meet your property and casualty coverage needs. A BOP combines the basic coverage requirements a small to medium sized business owner would need in a package.” Those insurance companies that understand the specialized needs of design firms sometimes combine certain coverage enhancements within their standard BOP. These enhancements can include extended coverage for architectural models, a waiver of subrogation (as is often required by project Owners during contract negotiations), and even some limited Auto Liabilty coverage.

“If your firm does not own any autos, the BOP can usually include ‘Hired and Non-Owned’ auto liability coverage. This would pay for damages to a third party, on behalf of your company, if an employee causes an accident while using a rented car or the employee’s own car while on company business. This addresses liability to others, but what about damage to the rented car? Some but not all insurers will provide this protection in a BOP; it’s usually referred to as Hired Physical Damage coverage.”

Our latest ProNetwork Newsletter, Your Company’s Auto Liability – What’s Covered? What’s Not?, focuses on the necessity of this coverage. A coverage which, if both architect/engineer and broker aren’t careful, can be overlooked at renewal time.

What does Hired Physical Damage cover? And why/when would you need this coverage?

Your star employees requests permission to attend a conference hosted by your state professional society. The conference is about 200 miles away. Public transportation isn’t an option; therefore, with an eye toward keeping expenses down, your employee decides to rent a car to drive to and from the event in one day. He asks you about taking out the rental car company’s insurance coverage. You mean to call your insurance broker, but, pressed for time, you decide that the BOP must cover this and you know that the extra insurance from the rental company would cost anywhere between $15 and $50 for the day.

Tragically, on the way home, your employee swerves to avoid some large debris in the roadway and inadvertently hits an oncoming car with a young adult driver and three co-workers who were headed home from a client’s golf outing. No one is killed, and fortunately your employee walks away unharmed. The other four, however, are not as lucky. All four are hospitalized, miss time from work, and require significant rehabilitation. Both vehicles suffer total loss.

To read about the outcome of this “doomsday scenario,” and to understand how Hired Physical Damage coverage can help, download the full PDF version of our newsletter 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: Barbara Sable is Assistant Vice President for RLI’s Professional Services Group. She is responsible for developing the content of RLI’s risk management programs and addressing the day-to-day needs of policyholders. RLI is an a/e ProNet Platinum Sponsor.

For architects, engineers and other design consultants, Professional Liability insurance (Errors & Omissions insurance) can seem like an annual headache. Once a year the app gets dropped in your lap; thus begins a process that, at times, seems fairly–er–intimate.

Cue the bright lights.

Report your billings! Tell us how many jobs you’ve completed! What kinds of projects did you do? What percentage of your billings went to subcontractors? How many employees left your firm? Describe your loss history!

Contracts require the coverage, so there’s no getting around the process, but does it really need to feel like you’re getting the third degree? Is the requested information that important?

According to the 2011 ACEC/AIA/NSPE annual Professional Liability insurance survey of carriers, Professional Liability insurance premium “rates depend largely on four main characteristics:”

  • Annual Billings
  • Type of Practice
  • Claims History
  • Project Types

So, yes. Your application matters every year. Your insurance broker will take this year’s application and place it side by side with last year’s. This can provide the kind of overarching perspective needed to secure fair renewal terms for your firm, both from your current insurance company and from other companies for your comparison. It’s a drill, certainly, but it can save you money and ensure that your firm is appropriately covered based on its unique practice.

Insurance premiums are often a major part of a design firm’s overhead, and the most commonly asked question at renewal time is usually, “Will my professional liability premium be going up this year?”

For an accurate answer, it’s best to go to the source. Sixteen Professional Liability insurance providers responded to the survey mentioned earlier; among them are several of a/e ProNet’s sponsors, including:

RLITravelersVictor O. SchinnererLibertyBeazleyCatlinHCC

The results of the survey are broken down and explained in the most recent issue of Engineering, Inc. (an ACEC publication); these include some interesting projections about the future of Professional Liability insurance, its underwriting parameters and its premiums.

Though experts do not expect the long-sustained “soft market” to change dramatically, “about half of the carriers that responded… anticipate a slight increase this year. Seventy-five percent of respondents expect price hikes in 2013.”

The full article is available along with the rest of the Engineering, Inc. Jan/Feb 2012 issue here. It goes on to address several more important insurance renewal questions, including:

  • How do I pick a Professional Liability insurance provider?
  • What limits should I purchase? How high should my deductible be?
  • If my business is down, why should I continue to carry Professional Liability insurance?
  • What steps can I take to keep my premium down as the design and construction industries continue to recover?

The full results of the 2011 ACEC/AIA/NSPE annual Professional Liability Insurance survey of carriers will soon also be available at the ACEC website.

Currently, there are a record number of insurance companies in the market that offer Professional Liability (E&O) policies for design professionals. This number fluctuates almost annually based on company interest, company loss ratios, and other dry, tedious factors which you probably don’t want to care about. And that’s okay. It is your insurance broker’s job to care about your insurance options.

So, who are the top Professional Liability insurance providers for architects and engineers?

a/e ProNet is a network of independent insurance brokers. This means we are not restricted by quotas and obligations dictated by any one insurance company. We are, therefore, free to represent the best interests of our clients and we do that by staying up to date on the Professional Liability programs available in your state.

Our organization is sponsored by several insurance companies with top-tier Professional Liability programs. The following is a list of our sponsors with links to the webpages which detail their respective Professional Liability insurance programs.

RLI Design Professionals
Navigators Pro
Victor O. Schinnerer
The Hanover Insurance Group
Liberty International Underwriters
OneBeacon Professional Insurance

(Keep in mind that this is not an exhaustive list. There are more Professional Liability insurance programs out there, and a/e ProNet brokers work with many of those, as well.)

Each Professional Liability program is unique. Here are a few of the factors that vary between them:

  • Coverage modifying endorsements
  • Pricing models
  • Preferred disciplines (architects, civil engineers, geotechs, etc.)
  • Application requirements
  • Consideration of loss history (past claims)
  • Limits/Deductibles offered
  • Multi-year policy availability
  • Billing thresholds
  • Premium credits

If/when you have questions about which of these professional liability insurance providers would best meet your needs, contact your local a/e ProNet broker. We’re here to answer your questions.