Posted on 07/28/2011, by Jeremy Edsall
Architects and Engineers: Protect Yourself Against Errors and Omissions
Even the smallest error can have serious consequences. Architects and engineers should protect themselves with professional liability coverage and by using effective risk management techniques.
In your field, you are expected to provide quality services and produce error-free work on a daily basis. Such precision is obviously important in such a highly skilled industry, but despite your best intentions, mistakes or misjudgments are bound to occur. Unfortunately, when they do, even the smallest error can have serious consequences. Clients could sue you or your company, and in addition to paying to defend yourself in court, you would also be responsible for potentially extensive restitution costs if found at fault. If you fail to protect yourself against this liability, the consequences for your business could be financially devastating.
Professional Liability Coverage
First and foremost, architects and engineers can protect themselves with professional liability insurance coverage. In the event of a claim, this policy will cover the cost of defending you in court and any monetary damages awarded to the claimant if you are found at fault.
However, just purchasing coverage is not enough. You will also need to engage in effective risk management as well as report claims on first knowledge. Reporting and responding to claims immediately by developing an appropriate response plan can ensure that you have the best chance of a favorable outcome.
Quick Response Plan
Your best risk management defense is to craft a very specific plan for responding to errors and omissions (E&O) claims. The following elements should be addressed in your plan:
• Report the claim to your insurer as soon as possible and in accordance with the requirements of your policy. Does the company accept a verbal notification, or are your required to notify in writing?
• Contact your legal counsel and request that they represent you in the claim. You should determine who this is before a claim occurs. Your insurer may provide you with someone, otherwise look for one who has experience with E&O claims in your industry.
• Visit the project site as soon as possible after the claim. Often, it is smart to document relevant conditions and gather information. Consider gathering documents, taking notes and photographing anything relevant to the claim. When possible, this should be done in the presence of your insurer or legal counsel.
• Identify or hire an expert. The claimant will generally hire an expert witness to testify that you breached your professional duty, so you should have an expert to defend your work. This could be a third-party or even you or someone from your firm.
• Designate a claims management project team within your office. Who will handle assembling and reviewing documents, chronicling events leading up to the claim, communicating with involved parties, attending depositions and other necessary duties?
• Inform any sub-consultants of the claim. They will have to defend their portion of the work, so they should be involved in the claim from the beginning.
• Assemble documents and stay organized. A large claim can be very time intensive, but the more organized you are with documents and timelines, the less it will cost you in lost billable hours.
This Everyday Insurance Insights is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Content © 2010 Zywave, Inc. All rights reserved.