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E&O Insurance

E&O Insurance

E&O Insurance

(OP)
Due to the slow economy I am considering not renewing my E&O insurance. Does anybody know about options to insure specific project, when the builder requires insurance?

If so, what would the cost be? Absolute $amount? Percentage of design fee? Percentage of construction cost? Where can I buy it?

Thanks for your input.      

RE: E&O Insurance

I am getting a quote right now through the ASCE program with Pearl.  I asked about project specific type of insurance, and the agent said it is hard to find this, however, an architect I know said he is able to get this kind, so I think Pearl just doesnt offer it.  

What limits of coverage do you have now?  How much is your premium?

If you dont renew this year, can you get it back when the economy turns around?  Hopefully, when you do, others wont see this as you being dropped by the insurance carrier, which could make your premiums higher.   

RE: E&O Insurance

(OP)
strguy11,

my current coverage is 100,000 per claim, max 300,000 aggregate per year, with a $5,000 deductible.

Premium is $3,000 per year, based on an assumed reveue of $70,000, and the vast majority of the projects done in residential construction.

Carrier is Pearl through ASCE.   

RE: E&O Insurance

My last company used to go with Willis.   Not sure if they do smaller firms, and what the premiums would be, but they would do project specific plans to increase our coverage from our base coverage, so they might do just a single project, but I am not sure.  I will talk to my architect client and see who does his.

RE: E&O Insurance

I have had coverage from two different carriers..neither will do project insurance, except to increase coverage on a specific project if you have their base coverage.  That is usually a high premium to do so.

You are practicing in an increasingly high exposure area...residential.

RE: E&O Insurance

I've had insurance through CNA and DPIC, neither would give individual project coverage.  Also, I know that times are lean and insurance is expensive, but the builders and developers are feeling the economy too.  I am seeing a much greater readiness in this community to sue (especially on the residential side) as they do not have the contingency buffers that were prevalent in the good years.  I would think hard before dropping insurance.

RE: E&O Insurance

The conversation of insureance and the need to have it reminds me of something an old lawyer once told my father.

When a lawsuit occurs lawyers will allways go for the path of least resistance for the greatest reward, and it is downright uncanny how the amount of damages sought in the lawsuit almost always matches the value of insurance coverage.

This seems especially true in this sue happy day and age.

Just my two cents worth.

Always remember, free advice is worth exactly what you pay for it!   

RE: E&O Insurance

I would recommend checking with your insurance carrier. A break in E&O coverage will result in loss of coverage for all the previous projects. Your liability never cease to exist and generally insurance companies require continuous coverage.

 

Rafiq Bulsara
http://www.srengineersct.com

RE: E&O Insurance

It's being penny wise but pound foolish. You'll save a bit of money but when you go back to being fully covered, what you saved will just go back into your higher premium because of the fact that you have prior work that are not covered by insurance.

RE: E&O Insurance

One major reason to carry insurance is that some clients require it - municipal mainly.  I've had a very slow six months and I just received my 2010 insurance bill.  This is a big chunck off of the bottom line..but it is necessary.

I'll never go through the ASCE insurance again. Their underwriter then did not want to cover my buisness because I "worked with contractors."  I replied back with some good french and told them of course I worked with contractors - I'm a civil engineer!

Robert Billings
www.newrivereng.com
http://www.facebook.com/robert.billings?ref=name

RE: E&O Insurance

Similar to what ColonelSanders83 said, laywers always go after the deep pockets first.  If you are "self insured" and working on residential projects where the liability is usually in the multi-thousands, not millions, it is not entirely irresponsible.  This is assuming you do everything you can to maintain a good relationship with your client and always be the first on the scene to do whatever it takes to fix the problem, not pointing fingers at others.  I read a good article discussing medical malpractice & other professional liability issues, and one bottom line that was reached was "people do not sue people they like".  If you are quick to admit your mistakes and provide help, MOST people do not feel the need to resort to a lawsuit.   I have thoroughly checked this thinking out with my attorney and she agreed.  There is risk in everything, and anything can happen, but we have more control over our destiny than we give ourselves credit for.  I have also been looking for a way to insure individual high risk projects, with no luck.  Any help in this arena would be appreciated.       

RE: E&O Insurance

KPS..and others...individuals are not likely to sue except in seriously egregious cases.  For commercial groups, developers, and group owners (condo associations, etc.)...they will sue.

I carry 1 million in professional liability...mostly because some of my clients require that level.

In the 1980's, professional liability insurance was extremely hard to get.  I went bare for 6 years...never had a claim with or without insurance (lucky!). I'm very careful about what I write and how I do my contracts. My general conditions protect ME!  I try to only sign contracts under my terms and conditions.  Not always possible, but I try.

RE: E&O Insurance

We have 2 projects that require $1million insurance coverage.  In their contract it states that if we had a time period with no insurance than they would need proof of insurance for 3 years before they would go with us.  I would take that into account if any of your current or future projects require insurance as this seems pretty reasonable to me.

Civil Development Group, LLC
Los Angeles Civil Engineering specializing in Hillside Grading
http://www.civildevelopmentgroup.com
http://www.civildevelopmentgroup.com/blog

RE: E&O Insurance

A $3,000 E&O premium could represent the billing for just one small design job.  Pay the $3,000 insurance premium and forget about it until next year.

www.PeirceEngineering.com

RE: E&O Insurance

Rhiem,

I have heard that once you break coverage it will be higher when you renew later.  I am in a situation where I need to obtain insurance and here is my case below.

I am planning to open my own practice next year, but currently still working for an engineering firm.  Recently I was given an opportunity to work on the side to develop relationships with new potential clients for my future business. The new engineering firm that have offer me this opportunity would like me to have insurance coverage.  They have offer to included me under their policy to reduce the cost of my premium and a favor to me.  I would be paying for what the extra cost of the premium would be to include me.  My question is this, would it be a good idea to be under their cover or should I seek my own insurance coverage?  I have no prior coverage.

The other thing is contract issue.  I prefer to have me own contract with the client directly, however this may not be the case.  The engineering firm is trying to get the project by providing both the civil and structural service.  I would be doing the structural scope.

Any thoughts?  Thanks in advance for your inout.

RE: E&O Insurance

Never had it, never will.  The way I figure it, the client can pay for the insurance in insurance premiums or in a safer structure.  I went for the latter.  Worked for me.

Mike McCann
MMC Engineering
Motto:  KISS
Motivation:  Don't ask

RE: E&O Insurance

When you start losing work because you have no insurance, it's time to get insurance.

www.PeirceEngineering.com

RE: E&O Insurance

I'm with you Mike.  I would get it if it ever hampered my ability to get work, but thankfully that has not happened yet.  Most claims that would likely happen in my line of work (residential and light commercial) would fall under the huge deductible they require on top of the huge premium.  Just not worth it.  

My methods of insurance remain in maintaining a close relationship with my client, careful double check of my work including specs and contracts, not getting in over my head, turning down clients/jobs that i dont feel good about, and being willing to help immediately if/when any problem arises.
 

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