Errors and Omissions Insurance 2

[Sparweb]

Last week I was floored when my employer admitted that he doesn't carry "Errors and Omissions Insurance". Since he consults as an aeronautical engineer, with design approval authority delegated to him by Transport Canada, he said that ultimate liability rests in Transport's lap, not his. I find this hard to believe, but I have noticed that he does get legal advice on these issues from time to time, so maybe he knows a loop-hole...

Do the experts have any experience with situations where engineering consultants do not need this kind of insurance?

STF

 

[RDK]

What province are you located in?

In Manitoba in order to get a Certificate of Authorization to provide engineering services to the public, that is to sell engineering services, you must have E&O insurance.

Other provinces have different rules, I’d check into that.

As an employee you would be considered an agent of the employer and therefore immune to liability regarding the acts of the employer. That is even if you designed something and it caused a loss and then the client sued, you would not be liable because in law it is the employer providing the service not you personally.

That would not stop someone from suing you personally, your company, your boss personally and all your brothers, sisters, cats and dogs. The cost of defense could get expensive just by itself.

One thing that my E&O insurance provides is legal services if I get sued. If you get sued then you may be on your own. Even having an agreement with the employer that he will provide a lawyer may not be enough because then the lawyer’s client is the employer and your best interests may not be respected. Also in a lawsuit bankruptcy is a real possibility and there would by no employer to honour the agreement.

I get my insurance from Econ. They are one of the biggest providers in Canada of professional E&O coverage. You may want to contact them and see if they have an employee package. This will cost but it will protect your personal assets.


Standard disclaimer: I’m not a lawyer and might not know what I’m talking about. Get some real advice; pay for a lawyer yourself to get an opinion where you stand. It might cost a couple hundred but will be worth it.


Rick Kitson MBA P.Eng

Construction Project Management
From conception to completion

http://www.kitsonengineering.com

 

[i278]

RDK,

I think the idea of carrying personal O&E insurance is wise indeed, and one that I (also an employee) hadn't ever considered. I'm going to send out for quotes.

The tricky bit with SparWeb's example is that provincial engineering law is often bypassed in the engineering side of the aviation world. The authority to approve designs of and modifications to aviation products is delegated by the federal Minister of Transport, at the discretion of 'the Minister'. It is long established that a provincial P.Eng. designation is not a prerequisite to receiving a delegation of authority. So, if provincial professional engineering legislation can't be applied to the engineers, I speculate that a provincial Cert of Authorization couldn't be mandatory.

But, having said all that, I would have to agree that not carrying O&E insurance is naive at best, and irresponsible at worst. The employer in question can only be working on the assumption that 'the Minister' is going to take it on the chin for him when things get messy. He obviously has a unique relationship with the federal Minister.

Regards

 

[RDK]

You are in Canada and call yourself an engineer. Therefore the applicable provincial legislation will apply to you. To do so you must belong to a provincial association and be a member in good standing. This memberships obliges you to follow the rest of the rules of the association.

You would not think of breaking the speed limit in your vehicle (a provincial law) and then claim that because you were engaged in the design of aircraft that the provincial laws do not apply to you. So why would you claim that the provincial law regarding engineering practice dose not apply?

If the authority comes from the federal Crown to design aircraft, then the provincial laws will apply. If the Minister told you that you could exceed the speed limit, the provincial judge would, after he stopped laughing, still fine you. Same logic applies to the engineering laws.

Saskatchewan recently (a couple years ago) granted a Permission to Consult to an individual who was engaged in the design of aircraft. I would suggest that this is also required, in addition to the Minister’s permission, to design aircraft in Canada.

The only exception to this would be for the employees of the federal Crown. Since they are in effect agents of the senior level of government they would not have to be bound by the laws of a lower level of government. When I worked for DND, I was not required to be registered.

Registration in Canada is cheap compared to some other professions. I am registered in two provinces and the highest is $300 (tax deductible) a year. There are some other benefits and social standing as well being registered. I, and the majority of my federal colleagues, were registered engineers as employees of the federal crown.

As to the insurance, you may be covered by a secondary insurance policy carried by your association. I know that there is such a policy in effect in Manitoba, but know little about it. I do believe that most associations also belong to this policy. You may want to contact your local association for more details.

Again, I recommend that you get some specific legal and insurance advice on this issue.


Rick Kitson MBA P.Eng

Construction Project Management
From conception to completion

http://www.kitsonengineering.com

 

[i278]

Points taken. I'll shut up now.

Regards

 

[Sparweb]

I went looking for more info, but I couldn't find any details of Econ's E&O insurance. Some advice that I did find about E&O stated that it also protects the client, in that they are guaranteed compensation for their loss.
I'm in Alberta, and we work on modifications and special repair designs for local aircraft operators. I could look into Alberta's laws; they might be different from Manitoba's. Still, the case you make that delegation of authority from the Minister is not an exemption from provincial laws is a good one.

I278 makes the point that individuals who have been delegated authority to approve designs for aircraft do not have to be PE's. This is true, and some alumni of my technologist class have obtained this type of delegation (with a 10 year head start on me). These individuals are usually certified technologists, so they belong to at least some professional body. However I bet that's completely beside the point, because the individual is providing the service, regardless of his background, and is therefore liable for the consequences of failure. The plaques on the wall don't matter very much at that point, do they?

Because we're a small outfit, the boss believes that the lawyers will "follow the smell of the money" over his head.

STF

 

[RDK]

Their web site is

http://www.encon.ca/english/index1.html

I misspelled their name as Econ not Encon as it should be.





Rick Kitson MBA P.Eng

Construction Project Management
From conception to completion

http://www.kitsonengineering.com

 

[ProEDesigner00]

I would like to know more about this subject from anyone in the U.S. I know in some states that you relieve yourself from alot of liability if you do not advertise in your name or literature that you do not preform engineering services. I personnally giving design services in the form of 3-d models to be evaluated by the customer to meet their requirements. Please point me to a thread that might better address this subject. I know I had participated in one a couple months ago that was quite opinionated and I would like some facts.

Thanks.

 

[JoeTank]

Mr. Kitson,
I can understand the protections enjoyed as a member in good standing. What do you think would happen if legal a action began after one allowed the membership to lapse (as in the case of changing professions)?


Steve Braune
Tank Industry Consultants

http://www.tankindustry.com

 

[RDK]

I would say that it would depend on the status of the individual at the time of the events leading to the action. If the person was a fully licensed engineer and then allowed his license to lapse because of retirement or a change in profession, then it would be the licensing status at the time of the events.

The flip side is an unlicensed person would not be off the hook for practicing without a license if they later obtained one. A few years ago when I was getting my Saskatchewan license that association made it clear that I was not allowed to practice until the application was complete and approved. (Personal license took a week or so, permit to practice took several months.)


Then again I’m an engineer not a lawyer so what do I know.



Rick Kitson MBA P.Eng

Construction Project Management
From conception to completion

http://www.kitsonengineering.com

 

[JoeTank]

Mr. Kitson,

"Then again I’m an engineer not a lawyer so what do I know."

I'd rather talk to an engineer about legal matters than to a lawyer about technical matters.

Steve Braune
Tank Industry Consultants

http://www.tankindustry.com

 

[RDK]

Steve

I’d have to agree with you there.

As a construction management type, I follow the law in that field. I am also trained as an arbitrator.

The end result is since I spend so much of my time in the applied law of construction contracts; I sometimes know this area better than some lawyers, especially if they work in other areas like criminal or real estate.

I just put that disclaimer in to make it clear that I was only offering a lay opinion and not a professional legal one. In tricky cases I always get a legal opinion. If they are too far wrong then their E&O insurance will kick in. Mine will only cover engineering opinions.


Rick Kitson MBA P.Eng

Construction Project Management
From conception to completion

http://www.kitsonengineering.com