From traditional, critical, infrastructure such as buildings, roads and bridges to emerging facilities like charging stations and retrofitted offices and eateries that comply with ever-evolving regulation, architects and engineers are forced to balance public safety, environmental concerns and demand with logistical issues, rising costs and profitability. A common factor on both sides of that equation is risk. In fact, that risk and increasing claims have even caused the market exit of some Property and Casualty (P&C) insurance carriers. If you’ve seen a rise in your Errors and Omissions policy premium, capped limits or that your coverage did not auto-renew, several factors, including some of the above complications, are likely to blame.
Challenges in Covering Architects and Engineers
Some of them were mentioned above but a few obstacles that have made both the design industry and covering architecture and engineering business more challenging include:
- Changing safety and environmental regulations
- Increasing scrutiny and pressure regarding carbon footprints, pollution/waste management and associated liabilities
- Increasing labour and material costs
- Managing logistics and changing supply chain costs
- Shortages of skilled labour and increased use of temporary workers
- Abandoned contracts and subcontractor errors
- Changing work orders and associated costs and risks
- Contract language that places a disproportionate amount of risk at the feet of the administering contractor and that otherwise doesn’t clearly define roles, responsibilities and liabilities
- Increasing claims and risks in residential builds and industrial HVAC projects
- The use of emerging and unproven technologies such as augmented and virtual reality in design
- The jumping of project areas by design teams
- Design flaws and counterfeit and substandard materials leading to personal injuries and fatalities
- High-profile tragedies such as bridge failures and stage collapses
A number of the above factors are a case of a few bad apples spoiling the bunch. Regardless, a reduction in the number of carriers and limit capping have led to a hard market, making professional liability insurance for designers more difficult to come by and more expensive. That said, ALIGNED is still able to deliver comprehensive and well priced insurance coverage for architecture and engineering firms.
Steps Architects and Engineers Can Take to Aid in Securing Professional Liability Coverage
Consider the following actions that may make it easier to secure coverage for all of your design and business activities and, more importantly, that responds when you need it most:
- Provide your broker with detailed, accurate and up-to-date information on staff, services, practice areas, projects, history, procurement and bid procedures, office policies and risk-management protocols – including cyber security
- Start-ups and smaller, younger firms can include architect and engineer bios and detailed information on their specific needs for coverage
- Retain a legal professional that specializes in design and construction contracts to draft service contracts that clearly delineate roles, responsibilities and intelligent risk transfer that adheres to current, relevant case law and have those contracts reviewed regularly
- Increase quality control of building materials
- Ensure that your firm operates in fields that correspond with its core competencies
- Follow best practices and practice management guidelines
ALIGNED – Commercial Insurance is All We Do
If you’d like more information on coverage for architects and engineers, contact an ALIGNED advocate.
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