Professional Liability Insurance: What Would You Pay to Protect Your Architectural License?

Jul 10, 2019 · 7 minutes to read

All Architects need to have Professional Liability Insurance to protect their business and most need it to bid on new projects as well. Of course, you may not be thrilled at the idea of purchasing Architects Professional Liability Insurance and having yet another business expense but you really have to look at the big picture.

Keep in mind, Professional Liability Insurance for Architects is truly an investment in your long-term growth. It is also the best way to safeguard both your personal and professional assets.

As a professional Architect, it’s important to make sure you are well-informed and able to make sound decisions for your business. To help you do just that, you’ll benefit greatly from the following information about Architects Professional Liability Insurance. In this article, you’ll learn what Professional Liability Insurance is, how it works, and what your cost may be.

The essential information provided in this article about Professional Liability Insurance for Architects should help answer any questions you may have.

What Is Architects Professional Liability Insurance?

Perhaps you’ve heard of Liability Insurance but aren’t quite sure what it is and how it helps licensed professionals like yourself. Maybe you’ve been meaning to get more information, but your day-to-day focus is on designing the highest quality living and working spaces for your clients. The many tasks and responsibilities of your build projects just don’t leave enough time to find out more about Professional Liability (aka Errors & Omissions) Insurance.

Professional Liability (E&O) Insurance is a necessity for anyone that gives instruction or advice to others. It helps to safeguard you from lawsuits if you’re a specially trained individual like an accountant, dietician, or architect. You’ll be able to use your E&O Insurance to defend against damages connected to your recommendations, your services, or your actions.

Professional Liability Insurance will cover you, your employees, and any independent contractors from allegations of negligence, incorrect advice, poor performance, and other harms.

What Will Architects Professional Liability Insurance Do?

You might assume that the Architectural firm you work for already covers you. However, that’s usually not a correct assumption. In fact, you’ll need to check with your employer to be sure you aren’t being exposed to possible legal risks right now.

Regardless of your job situation, if you haven’t purchased your own Professional Liability Insurance for Architects, then you’re putting your license and reputation in jeopardy.

Have you ever had someone criticize your performance? Have you ever worked with a client that was unhappy and accused you of misrepresentation or negligence? Hopefully none of this has happened.

But what if it did?

Once a claim of carelessness or ineptitude is made then you have to address the situation, whether it’s true or not.

You’ll need to:

  • pay for an investigation of the allegations
  • hire an attorney to represent your best interests
  • miss work to attend court proceedings
  • cover the cost of court fees

All these efforts will cost you time and resources, no matter the validity of the claim. This is why Professional Liability Insurance for Architects is a great resource. E&O Insurance will protect your reputation, and opportunities for future projects, from being ruined.

Above all else, Architects Professional Liability Insurance is meant to give its policyholder financial security. The most important being the costs related to a judgement or settlement against you.

The most common misconception for many Architects is that a General Liability policy will be enough to keep their business safe. Unfortunately, General Liability only provides benefits for things like slander, non-employee injuries, or property damage. In order to get all the coverage you truly need, it’s best to buy an Architects Professional Liability Insurance policy.

Another common misbelief is that an Architect cannot be held personally responsible for an alleged claim. That is simply not true. If you don’t have a Professional Liability Insurance for Architects to absorb the financial costs then you’ll need to use your personal resources. Plus, if you are unable to compensate the unhappy client, as directed by the court, then you could find your personal assets in peril.

What’s the Actual Cost?

At this point, you finally understand the importance of E&O Insurance. Now you know what it’s all about and how it can assist your business. It’s clearly more than just another insurance plan but, rather, a smart investment in yourself and your future in architecture.

Providing you with the exact premium you’ll pay for Professional Liability Insurance isn’t very realistic. There are too many different unique factors that go into the calculations for premiums. So it’s not very useful to speculate. It’s best to contact an experienced agent and receive a customized quote.

As part of the quoting process, you’ll be asked:

  • How large is your company?
  • What is the location of your business?
  • What is the total number of people you employ?
  • What is the amount of gross revenue you book annually?
  • How do you conduct your employee training program?
  • What operational policies do you have in place?

This information may seem unrelated to buying Professional Liability Insurance for Architects but it definitely is important. You see, it provides insight into any weak spots within your organization that could encourage a liability claim.

Additional key factors you’ll learn about:

  • What type of Architectural projects does your company typically manage?
  • What type of quality control methods do you use?
  • Has your business had past legal troubles?
  • What are the chances of you or your employees being named in a lawsuit?
  • How well do you and your staff document communications with clients, subcontractors, etc.?

Each of these details will influence your insurance premiums!

Now that all that has been covered, be advised that, on average, the annual cost for Architects Professional Liability (for a small company) starts at around $1500.

That’s really minimal when you consider how much coverage is afforded under a Professional Liability policy. Remember, your E&O Insurance will cover costs related to a liability claim, whether it’s valid or not. So that means you’ll receive help paying for investigations into the claim, paying for legal representation, covering court fees, and issuing a settlement check to, if necessary.

If you don’t have a Professional Liability Policy, then you’ll have to come up with a way to cover the costs of a liability claim all on your own.

Why Architects Professional Liability Insurance is Worthwhile

You’ve already read the many reasons why Architects Professional Liability Insurance is key to running a successful firm. E&O Insurance absorbs the weighty costs related to legal issues which also helps protect your financial future (both personal and professional).

Not to mention the fact that Professional Liability for Architects could help you get future business simply because you were responsible enough to take out such a policy in the first place.

To provide a quote, you’ll be asked about many different aspects of your business such as your claim’s history, the size of your company, the make-up of your staff, operational procedures, and type of design projects.

As we previously advised, on average, business owners typically pay about $1,500 annually for liability insurance.

After all your years of education and hard work, isn’t your Architect license worth protecting with less than $5 per day in Professional Liability coverage?

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