Client requesting full Professional Liability Policy 1

[LOTE]

I have a client that is requesting to see my full professional liability policy, not just a COI. Has anyone had this request before? I have clients request COI all the time, but never to see the full policy documents.

My policy documents have some personal company information that I don't care to share.

 

[gte447f]

No I have never fielded such a request. I would offer to provide the COI, politely decline to provide a copy of the policy or any other documentation, and bluntly ask them why they would make such a request.

 

[IRstuff]

They want to know what you're not covered for, in case they want to sue you

 

[SWComposites]

probably the type of client you do not want to deal with.

 

[TheFeds]

This is a completely normal request—and here's why.

The certificate of insurance (COI) is not legally binding on the insurance company with respect to specific coverage details of the actual policy and its endorsements (policy amendments for special cases), and with respect to the additional insured parties. That is to say, it is a summary for convenience. Most of the time it is convenient enough—because to provide a knowingly false one as part of a bid for contracted services is simply fraud, which isn't going to be a good engineer's goal.

But what if the insurance policy contains an objectionable endorsement, like an exclusion for professional liability? This often won't be noted on the certificate, but it would be very important to the qualifications for some kinds of contracts. The client probably just wants to make sure that there is the right insurance available—which, as a matter of fact, is so that they don't get the urge to sue you if you screw up. The client may also be aware that a lot of people were never instructed in the details of insurance, and might be overlooking the significance of this.

Or, what if the engineer's business department just took an old copy of the certificate of insurance, and roughly edited in the name of the new client at the bottom? (Don't do this: let the insurance company generate its own certificates. It's their job, and it's no trouble for a reputable firm.) The client may be wondering how that name got there, but estimates that it is just an overzealous assistant, and that the policy itself has a term or endorsement that just says that anybody they contract with is an additional insured—and therefore the suspiciously edited certificate would be immaterial. Maybe they think that the conversation will go more smoothly if they don't voice suspicion, and instead couch it in terms of a simple administrative request.

The bottom line is, just give them the policy document. Most policies are very standard and very boring, and their disclosure won't put you at a disadvantage. And if you have proprietary information in the policy, either redact it with a black box (leaving the section heading so they know what they are missing) and note the reason for redaction (like a short comment beside it), or negotiate with the client about nondisclosure.

It's cheaper and easier for you and them to talk about it in advance, than to have a problem and argue about it later.

 

[Smoulder]

I wouldn't at least without double checking. Might be regional but I've been warned our policy is void if sent out. One of the policy terms. Maybe also a problem with clauses requiring you to minimise damages. Giving out insurance terms lets clients tailor claims to get max out of insurer.

 

[LOTE]

@TheFeds this was very helpful.

I ended up sending them the policy with things like premium and deductible values redacted.

 

[TheFeds]

I wouldn't at least without double checking. Might be regional but I've been warned our policy is void if sent out. One of the policy terms. Maybe also a problem with clauses requiring you to minimise damages. Giving out insurance terms lets clients tailor claims to get max out of insurer.

The insurance confidentiality clause appears to be possible for at least some types of insurance (such as directors' and officers' liability) in some jurisdictions (Australian example), but I don't recall seeing it in a regular business insurance policy. If this is something the policy requires explicitly, then by all means comply out of pragmatism!

However, it seems a little bit cumbersome because proof of sufficient insurance is frequently required by the solicitation or the contract for a job. If your insurer is responsive enough to be consulted for consent to disclose every time you wish to bid, and they aren't going to hold this pestering against you at renewal time, I guess it would be operationally feasible. As to whether it is economical, I don't know. An insurer's concern about claimants identifying their willingness to pay could be rational depending on their costs of doing business.

I wonder what the insurance regulators think about a policy that is represented as being voidable by the simple mistake of a staff member? It seems unconscionable unless there is a reasonable alternative offered at a reasonable added cost. Such a mistake might trigger cascading breaches of contract for all the work required to be done under that insurance. This doesn't seem good for the client, especially if the lack of insurance means that every costly problem now has a higher risk of going to costly litigation. Wouldn't it be interesting if that was one of the policy terms that the slightly nosy client wanted to see and avoid?

 

[jhnblgr]

Typically unless you are working from a government agency then people requesting it got their money from suing people even if you do nothing wrong. I had a client request all sorts of insurance, their accountant was the one making the request. In the end they requested that I provide insurance their expensive car as the reasoning which in further review I could not legally do anyway. They only made this request post authorization of work and I told them no. I learned my lesson to never get involved with these situations. Choosing the right client is key.

 

[Smoulder]

@TheFeds Yes that Australian example is exactly it. That's where I am. Company doesn't keep our policy where client facing people can get it. Won't go out by mistake. Certificate of currency is accepted by 95%. Only occasional troublemakers want more and they simply can't have it. Nothing we can do, they can walk away but it's always clients attached to lowest price so doesn't happen much. Your other concerns are usually covered other ways like obligation to maintain insurance for 6 years and notify immediately if not available at commercially reasonable rate.