Posted on: February 26, 2018 by Huntersure LLC.
Architecture and engineering are both high-risk professions. A minor error in a design can lead to delays in construction or other significant losses, resulting in potentially costly lawsuits. Many Architecture and Engineering (A&E) risks are fairly obvious and are covered by industry-specific professional liability insurance. However, there are a few areas where the insurance options aren’t quite as straightforward, which can create serious coverage gaps for A&E professionals. Here are four areas in which coverage gaps for architects and engineers are most commonly found.
The contractual liability coverage provided under an A&E commercial general liability (CGL) policy can be quite broad. On the other hand, the contractual coverage provided under an A&E professional liability policy can be very limited. Insurance agents should review their A&E client’s contracts in order to determine whether or not their clients are entering into possibly uninsurable agreements, and also to gain more insight on the types of liabilities they are taking on so coverage can be tailored to better fit their needs.
Design-build construction is becoming increasingly more common. According to Facts & Stats from the Design-Build Institute of America, nearly 40% of all nonresidential construction projects utilize a design-build approach. Not only does design-build construction cost less, but projects can be delivered and completed faster. As a response to this growing trend, more A&E firms are adapting to offer blended design and manufacturing services to increase their client base. However, this also increases their exposure, and should be addressed accordingly in their liability coverage.
Many A&E firms integrate custom technology into their designs in order to stay innovative and relevant. Unfortunately this also opens them up to increased risks. A small coding error can result in delays in completing a project and/or financial loss for the client, and unless the firm’s insurance policy is specifically endorsed to include technology services and products, the firm may be left financially responsible. Just as A&E firms are adapting to keep up with rapidly advancing technologies, their insurance should too.
Cyber-related risks are threatening almost every industry. While A&E firms may take on considerably less risk in this area than financial institutions or retail giants, there is still a lot of risk involved – especially in the area of data transfer. Many A&E firms are increasingly relying on electronic data transfer of sensitive information and using technology like building information modeling (BIM) to share design ideas for projects that involve working with multiple parties. Agents should review their clients’ cyber-related risks in order to ensure they have adequate coverage in that area.
Huntersure LLC is a full-service Managing General Agency that has provided insurance program administration for professional liability products to our partners across the United States since 2007. We specialize in providing insurance solutions for businesses of all sizes. Our program features can cover small firms (grossing $2.5 million annually) to large corporations (grossing $25 million annually or more). We make doing business with us easy with our breadth and depth of knowledge of E&O insurance, our proprietary underwriting system that allows for responsive quoting, binding and policy issuance and tailored products to meet the needs of your insureds. Give us a call at (646) 751-3030 to learn more.