Small firm prof. liab. ins. and overhead
Small firm prof. liab. ins. and overhead
(OP)
First the info,
Small structural engineering firm, mostly residential and some small commercial work, with less than $200,000 in gross revenue per year.
With that said, from your experience what would be the expected premium for a Professional Liability Insurance policy?
Second question, what companies do you use and are happy with. I would love a few names/contact info.
Thanks for your help. I am just finding it necessary to go out on my own and need a better understanding of the associated costs.
Thanks.
Small structural engineering firm, mostly residential and some small commercial work, with less than $200,000 in gross revenue per year.
With that said, from your experience what would be the expected premium for a Professional Liability Insurance policy?
Second question, what companies do you use and are happy with. I would love a few names/contact info.
Thanks for your help. I am just finding it necessary to go out on my own and need a better understanding of the associated costs.
Thanks.





RE: Small firm prof. liab. ins. and overhead
I have not been required to have professional liability, only general liability and that one runs me $800/yr.
I got a very nice general ;iability policy through Mercury Insurance and am very pleased with them.
Greg Lamberson, BS, MBA
Consultant - Upstream Energy
Website: www.oil-gas-consulting.com
RE: Small firm prof. liab. ins. and overhead
If you don't ind me asking why don't you carry liability.
I am looking at insurance myself and would be very interested to find out the why/why not to make a decision for what I will do.
RE: Small firm prof. liab. ins. and overhead
I don't mean to be rude, but this is not a post debating the need for it or not, I have already determined my needs, now I am looking at the Benjamins, $$$. I know that a general and professional policy will be needed so I thank you for the general information, now does anyone have info on the professional for the type of business described?
Any info would be appreciated.
Also, if any of you have started the exact same company, I would love to pick your brain through email or maybe a phone call or two or three and I'll send you a gift card to Applebee's or something since the likelyhood of me being able to take you out to lunch would be slim to none unless you are in the greater Phoenix area...
Thanks in advance...
RE: Small firm prof. liab. ins. and overhead
Greg Lamberson, BS, MBA
Consultant - Upstream Energy
Website: www.oil-gas-consulting.com
RE: Small firm prof. liab. ins. and overhead
I think your premium will be largely dictated by your history and your location as well as the type of work you do.
Best option is to get a couple of quotes for your specific situation.
csd
RE: Small firm prof. liab. ins. and overhead
I'm not required to approve or sign off on designs or drawings. The most my clients have required to date is General Liability.
The Risk Manager for a major EPC contractor I do quite a bit of work for put me on to Mercury to provide cost effective liability policies for individuals and small businesses. I have been extremely pleased with them so far. Of course, allot depends on the local agent/rep and I an fortunate to have a very good one.
Greg Lamberson, BS, MBA
Consultant - Upstream Energy
Website: www.oil-gas-consulting.com
RE: Small firm prof. liab. ins. and overhead
RE: Small firm prof. liab. ins. and overhead
RE: Small firm prof. liab. ins. and overhead
http://www.nspe.org/liability/insurdirectory.asp
RE: Small firm prof. liab. ins. and overhead
On the same note, is there anything when you started out that you completely underestimated as far as time or money or resources that you wouldn't mind sharing?
Thanks for all the responses.
RE: Small firm prof. liab. ins. and overhead
RE: Small firm prof. liab. ins. and overhead
If anyone else has additional info, I am open to everything.
Thanks.
RE: Small firm prof. liab. ins. and overhead
Since your handle is almost identical to mine, I figured I had to respond... I am also in the Phoenix area. I started my firm about a year ago and my first year's prof liability premiums were arround $3500. I use an agent that specializes in architects, engineers, and other professional's insurance, and am very happy with him. My policy is through XL - $1M/$1M coverage. I also have a general liability policy which runs about $500/yr. If you are doing inspections, site visits, etc, you will also need to carry vehicle insurance. I just use my own personal car insurance...
Would be happy to give you my insurance agent's contact info if you want it. It's nice working with a local agent who is knowlegable about our industry specific needs.
I think the one thing I underestimated the most was coming up with my own standard details, specifications, letterhead, invoice, etc, etc.
RE: Small firm prof. liab. ins. and overhead
Things are industry specific but our projects are typically one to two months payment terms are between 60-120 days after completion and that rolls on to month end so you can easily be looking at 6 months to get monies in. That can really hurt in the early days or when expanding taking on extra staff, new offices etc.
RE: Small firm prof. liab. ins. and overhead
RE: Small firm prof. liab. ins. and overhead
We have spoken to a lawyer about this and the order from the client is the legally binding contract so it does not matter what you put on your quote, this again maybe specific to the UK. We now have a series of letters we send out, you have to send three before taking court action and they have to be seven days apart. We have not had to take anyone to court yet but this does in effect give an extra month “free credit” to the client.
I would love to be in your situation where 30 days is seen as a long time, sadly it is not the case at least here in the UK. This still remains about the biggest unforeseen issue we face.
RE: Small firm prof. liab. ins. and overhead
You had mentioned about expenses; I will share with you some of my experiences.
-Do not estimate your expenses based upon residential fees for phone, internet, elec., gas, etc. Everything will be 2 to 2 1/2 times higher in addition to higher deposits.
-There will be hidden costs that you will find out about that you may have not had any idea existed; be ready for the unexpected.
-Pro liability insurance usualliy costs me about $16k a year with $500,000+ in billings (we are a small firm).
It was under 10k a year when the billings were less so your agents suggestion that it would be under 10k is probably relatively accurate. I went bare for about 5 years before I could buy insurance.
-One thing to keep in mind about pro liability is the very high deductibles you can incurr. I would suggest that you define "what" type of claim you are trying to insure against. For example; if you are doing residential designs and the whole value of the house is under 500k you may not need a million dollar policy. Some people will argue that you want to insure against a major collapse but the reality is you can't buy enough insurance for a disaster.
Maybe the worst that would happen is a deflecting ceiling and it needs to be strengthed; surely it wouldn't cost a million on a small home. This is just something for you to think about; not trying to convince you.
-Will you have employees? If so, do you plan on providing health insurance? Even if it is just you then health insurance can be a very costly item depending on your age. This can be a tremendous overhead item.
Also, you will be paying unemployment insurance premiums to the state.
-Receivables can be one of your biggest headaches. Choose your clients carefully. When you get a client that is slow paying you will need to become aggresive which can be hard to do. This client may be one of your biggest clients and gives you a lot of work; it can be a very fine balancing act.
-You can get all of the free work you want. You will be asked by individuals and friends to provide engineering services and generally they are wanting a free ride.
I have them come up to me during church and start telling me about their issues. I politely tell them that I will be glad to help them if they come by my office on Monday.
This way we can get some preliminary ideas together and I can give them an estimate of the costs invovled. Some of them will give you a silly look but the individuals who respect you will make an appointment and will expect to pay you. Remember, you can get all the free work you want.
-If you work in other states and you are a corporation you will need to form a corp in the other states also; figure about $200/year for fees and registered agents.
Also, you will be required to have a certificate of authority from the engineering boards; figure another $200 a year. I have an "S" corporation but if I did it again I would form an LLC (which was not available at the time I set up a company).
An LLC is simpler and cheaper to set up.
-What are planning on doing about accounting? I was so busy doing engineering work there was no way I could learn all of the corporation tax laws, filing of quarterly and monthly reports, depreciation schedules, etc.
I would suggest getting a CPA that will handle your business needs as one of your priorities. It can get very complicated and very, very time consuming. If you try to pay your own bills and do your accounting you can figure at least one day lost every week. If you aren't producing engineering you aren't billing.
Accounting fees for a small firm will run about $300/month plus your end of year taxes.
-Who is going to do your billings? This can be time consuming; same as reviewing contracts, etc.
-Believe it or not, it will be very difficult for you to handle billings, reciveables, contracts, accounting.
Relieve yourself of the difficult items such as accounting.
This will even be more important as you gain employees.
-In 19 years of owning my firm I found early on that my expenses were 50 to 55% of my gross income. Note that I did not say "billings" but your actual gross.
If you gross $200k you can reasonably expect to have a personal gross of $100k. This was my experience with minimal travel expense.
-I hope some of these thoughts give you something to ponder.
Sincerely,
Randy
RE: Small firm prof. liab. ins. and overhead
RE: Small firm prof. liab. ins. and overhead
Thanks again...
RE: Small firm prof. liab. ins. and overhead
I am in a similar business situation to the one you posted. I have 1mil with CNA/Schinnerer and pay about $9k per year. That is based on an estimated revenue of about $115k. The benefit of this plan is that I can lock into a 3-year fixed price at each renewal. Since my business is growing, my insurance fee stays fixed based on revenues the year prior to my last renewal.
My agent did price 3-4 different carriers. This one was the most expensive by 10%-20%. But with the 3-year lock, it ends up being comparable in year 2 and 3. My next renewal in 2009 is going to be brutal. Also, it seems better to find a carrier and stick with them.
RE: Small firm prof. liab. ins. and overhead
And a question for RHB51, for marketing your service, what was your strategy in the beginnig? It plays a vital role for the business and we engineers usually not good at this subject.
RE: Small firm prof. liab. ins. and overhead
I was fortunate that I knew 2 contractors that would need my services. I made 2 phone calls and picked up 3 projects.
They had known me previously. I have a specialty structural firm that specializes in concrete hi-rise formwork, shoring and reshoring. Very few engineers do what I do as an independent engineer so the demand is great.
When I started getting more clients (which were all word-of-mouth) I always did the very best I could.
I wish I had a magic potion for you but I never had to market myself.
There is one thing I would say to new clients though and they would drop out of the chairs when I said it;
"If you are not happy with my work do not pay me".
I was never taken up on the offer.
They had never had anyone stand behind their work 100%.
They did not know me other than by recommendations and everyone of them used my services many times.
RHB51
RE: Small firm prof. liab. ins. and overhead
RE: Small firm prof. liab. ins. and overhead
I am not sure what the value of coverage is - I think it was around $20 Million (but this is from memory). I decided that I didn't need it at that price.
"Do not worry about your problems with mathematics, I assure you mine are far greater."
Albert Einstein
Have you read FAQ731-376: Eng-Tips.com Forum Policies to make the best use of Eng-Tips Forums?
RE: Small firm prof. liab. ins. and overhead
The general liability was from State Farm.
"Do not worry about your problems with mathematics, I assure you mine are far greater."
Albert Einstein
Have you read FAQ731-376: Eng-Tips.com Forum Policies to make the best use of Eng-Tips Forums?
RE: Small firm prof. liab. ins. and overhead
Again, thank you to all of you for your help.
RE: Small firm prof. liab. ins. and overhead
RE: Small firm prof. liab. ins. and overhead