The new professional liability insurance policy provided by Schinnerer to architects, engineers, construction managers, environmental professionals, landscape architects, surveyors, and other professional service firms is being introduced as the various state insurance regulatory offices approve it. While policyholders won’t be insured through the new policy until their first renewal after the state’s authorization date, coverage under the current policy will be “liberalized” in each state as soon as the state approves the new policy. So firms will benefit from the coverage enhancements as soon as it’s legal in each of the 53 jurisdictions that regulate the policy.
This means that firms will be able to take advantage of the new tools provided by the policy to manage their exposure and reduce the cost of any claims that might arise.
The new benefits are discussed in the most recent issue of Guidelines for Improving Practice and in a webinar from March—a program titled “Tools to Help Mitigate and Reduce the Cost of Claims”—which can be downloaded or streamed. Other information is also available. A few of the enhancements firms should be glad to hear about include:
- Expanded coverage for a pollution incident: that could arise out of the insured’s activities or activities of anyone for whom the insured is liable; the liability that the insured assumed from an insured client; or at a covered location or a non-owned disposal site. Coverage for pollution incidents is not based on negligence like the coverage under the professional liability insurance policy for the failure of the policyholder to meet the standard of care for professional services performed.
- A deductible incentive for what is considered the early resolution of a claim through negotiation or mediation. If the negotiation or mediation of a claim takes place within 180 days of the reporting of the claim by the insured firm, and such claim is ultimately resolved by negotiation or mediation that results in an indemnity payment on behalf of the insured firm, the deductible applying to the claim will be reduced by 50% up to $10,000.
- Rectification coverage that enables design firms to take the lead on design-build projects by mitigating the risk that a design problem will lead to a major financial loss. The coverage extends to any design defect caused by professional services on any part of construction or engineering works for a project upon which the policyholder is responsible for both design and construction.
The new policy retains the coverages provided in the past that encourage international practice, reward risk management procedures, and protect the firm after a merger or dissolution. But as noted above, the policy also has many new features that policyholders, prospects, and their brokers should value.