Although professional liability insurance and general liability insurance are not guarantees against risks, having one or both of these coverages can provide peace of mind.
Here are several scenarios that can result in damaging lawsuits, regardless of whether the architect is at fault.
1. Misinterpretation of renderings: A designer misinterprets your renderings and order costly materials that are not going to work with your plans. Your mutual client is upset and sues both of you for professional negligence and demands that you reimburse him for the useless materials. You do not believe this is your fault, but you have been named in the lawsuit and have a responsibility to appear in court. In this instance, customized professional liability insurance, or errors and omissions insurance, can protect against such claims. Some policies may even appoint or pay an attorney familiar with similar cases to help defend you.
2. The wrong advice: You advise a client to purchase a particular style of ramp for disabled individuals that you believe meets ADA standards. Turns out you were wrong, as the ramp has been outdated for some time. As a result of this error and the resulting code violation, you could be required to appear at a hearing. Similar to the scenario above, professional liability insurance can help protect you in this instance and could even help pay those pesky defense bills.
3. Client injury: A client accidentally trips on his way to review your designs. As a result of the fall, the client suffers a serious cut that requires stitches. A customized general liability insurance policy can help cover medical expenses caused by the accident, regardless of fault. Most general liability insurance policies will protect you against covered third-party claims for bodily injury, as well as cover related medical costs.
4. Personal injury: One of your employees is on a job site. He talks to the contractor about one of your mutual clients in a false and unflattering way. The client learns of this discussion and sues for slander. General liability insurance can help to cover the subsequent claim and even pay for an attorney to defend you if necessary. With the right policy, you’ll be protected against covered third-party claims for this type of damage.
5. Protecting home base: Over a holiday weekend, there’s a short in an outlet that creates a fire at your firm and significant damage to the drafting space. You are forced to close during repairs, losing clients’ valuable time on their building schedules and revenue, as well as having to cover the costs of repairs and new equipment. Property damage insurance generally covers first-party property damage. These types of policies can insure an office space against many disasters, and can also provide business interruption and lost income coverage, when it’s needed most.
The American Institute of Architects in one of its prominent “Best Practices” reports highlights the value that professional liability insurance policies can potentially provide to architects and design firms. The report encourages AIA members to consider gaining access to the power of insurers including expertise, a network of consultants and attorneys, and financial resources. Architects with this type of insurance coverage not only get valuable assistance with a loss or possible loss, but can also in many cases avoid making a bad situation worse.
Hiscox is the first United States insurer to enable small businesses to purchase insurance directly and online in real-time. Self-employed professionals in the architecture, engineering and design industries can purchase insurance tailored to the specific risks of their industry to help protect themselves against potential claims and lawsuits, even if they are unwarranted. Policies are underwritten by Chicago-based Hiscox Insurance Company Inc., which is rated ‘A’ (Excellent) by A.M. Best Company.
Small Business Architectural Insurance: www.hiscoxusa.com/smallbiz