Maybe you’ve been designing and building residential homes, landscapes, and business complexes for many years. Or perhaps you are new to the design industry and recently opened your own architectural firm with a few employees. Do you worry about how to keep your business protected? Do you have a sound plan to deal with the variety of adversities that could arise?
Any plan you develop to protect your business should include Professional Liability Insurance for Architects. Why is this type of liability insurance essential?
You see, Architects Professional Liability Insurance (aka Architects Errors & Omissions Insurance) is meant to safeguard your business from the financial strain of a lawsuit. Not to mention, the devastation a liability claim could have on your reputation and your bottom line. Remember, it doesn’t matter if the lawsuit is authentic or fabricated. You’ll still need to hire an attorney, miss work for court appearances, pay for legal fees, and possibly make restitution to the claimant.
Design professionals share their expertise with clients. As an Architect, your customers rely on your ability to draw blueprints, comply with zoning and safety regulations, order building materials, hire subcontractors, oversee construction efforts, and prepare for building inspections. Making an innocent mistake could snowball into a critical error that puts your clients in great peril.
Let’s break things down so you better understand how E&O Insurance would benefit you.
In this blog post, we’ll explore questions such as:
What are my risks as an architect? How do I protect myself and my Architectural firm from lawsuits? What is Professional (E&O) Liability Insurance and what does it cover? Why do I need Architects Professional Liability Insurance?
The easiest place to begin is by looking closer at the types of exposures Architects face every day.
What are my risks as an Architect?
When a client hires you as their Architect, they are not just purchasing your expertise in designing interesting living or working spaces. Architects are also responsible for the thoughtful and proper execution of their design. So, as an Architect, you’ll need to be sure some of the most common mistakes are avoided while the project is under construction. If you don’t make the proper effort to avoid typical building risks, then you’re opening yourself up to future complaints and possible lawsuits.
Some of the main exposures that you face as a licensed Architect are:
- Installing the wrong materials because of changes to design details or missing information
- Decisions that need to be made but are not illustrated on the blueprint drawings
- Inadequate materials and planning for things such as ventilation, weatherproofing, installation, roofing, and windows
- Design errors that lead to pollution
- Not being able to easily make changes to the original design to accommodate the client’s wishes and needs
How do I protect myself and my business from a lawsuit?
No matter how many successful projects you’ve completed or how careful you are while overseeing the build, there are always risks involved. Everyday Architects like yourself might run into various challenges that need to be resolved quickly and professionally. Sometimes, despite your best efforts, a simple matter can evolve into a potential liability claim.
In fact, construction experts advise the most common cause of Architects E&O insurance claims is when building materials for the final design are changed and there is no documentation of the communications between clients, contractors and the Architect. Furthermore, when Architects don’t keep a record of the final decision such as who made the decision when it was made, and what alternatives were presented, they tend to lose their liability case.
So how do you protect yourself?
Unfortunately, there is not a 100% foolproof way to be sure you will never be named as part of a liability lawsuit. However, Professional Liability Insurance for Architects will shield you from the financial burden of a liability claim.
What is a professional liability policy for architects and what does it cover?
Professional Liability Insurance for Architects (also known as Errors & omissions Insurance) is intended to help shield your performance as a licensed Architect.
You have the option of different liability limits, usually $1M or $2M in coverage, which will pay for court and attorney fees, investigations into the claim, and any settlement or judgments made against you.
Remember, Professional Liability Insurance for Architects can help cover the eligible expenses we mentioned whether you are found guilty of the allegation or not.
What’s the difference between General Liability and Professional Liability insurance?
In many cases, clients will require you to show proof of general liability insurance. It’s often required of all vendors, construction crews, skilled tradesmen, and architects that show up to a job site.
Well, risk managers know that an architect could accidentally injure someone or damage property while working on the building. By having general liability insurance in place you’ll be protecting your Architectural firm from claims of bodily injury, property damage, and slander. However, your general liability policy will specifically exclude any damages caused by an error in your professional acumen.
In order to do that, you’ll need to acquire Professional Liability Insurance for Architects which is basically malpractice insurance for architects and designers.
Why do I need a professional liability policy?
Architects are well-trained, licensed, and very skilled draftsman that are responsible for creating safe structures. Each project requires an Architect to make thousands of calculations, decisions, and recommendations. Collectively those tasks should generate amazing results, but they also hold the possibility of a wrong decision or a mistake.
Imagine you receive a phone call from an unhappy client or, worse yet, a court summons in regard to a negligence claim. Could you afford to hire an attorney? How will you meet your current deadlines and still appear in front of the judge? What if the worst possible outcome occurs and you must pay punitive damages? Will you also need to defend yourself from having your professional license removed?
Many business owners find themselves in similar situations and are not financially prepared to handle it. Are you? Will you be able to bankroll your operations and still cover the costs of a malpractice suit?
Purchasing a Professional Liability Insurance for Architects policy is the best way to plan for such a rainy day. It will cover the costs from a liability allegation which will keep your professional and personal assets secure.
There’s another way to think about it. Can you really afford to go without Professional Liability Insurance?
Do I need my own professional liability policy?
If you’re a designer that currently works for an Architectural firm then you may be wondering if it is even necessary to buy E&O insurance. The simple answer is yes.
Let’s face it, you probably aren’t 100% sure if your current employer has a robust Professional Liability Policy in place. You also may not know how much coverage you are afforded under your employer’s Architects Professional Liability Insurance. Buying your own professional liability policy means you’ll always know the policy is current and the coverage limits are appropriate.
You’ve worked for many years to earn your Architect stamp and share your expertise with the architectural community. So it’s just good sense to have Professional Liability Insurance in place. After all, one minor miscalculation or oversight (by you or a subcontractor you hired) could cause you a tremendous amount of professional turmoil and financial strain. Knowing you have Professional Liability Insurance for Architects in your toolbox and ready for use will give you peace of mind.