Professional Liability Premiums Remain Steady for Architects & Engineers


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Owners of architecture and engineering firms are open to liability whenever an engineer or an architect makes a mistake that costs a client money. Getting professional liability insurance helps to protect the firm against very costly lawsuits that derive from such mistakes. Operating with the coverage of a professional liability policy for engineers and architects will help to protect the business against negligence claims and other types of errors that result in the dissatisfaction of the client.

A lack of coverage for these situations can bankrupt a firm. Not only would your business have to pay the associated costs, but you will also receive negative publicity. Contrary to what some people say, bad press is very real and it can easily damage your business reputation beyond repair. Even if the business will recover after such a scandal, it will be harder for you to bring about new big projects, at least in the short term.

In a 2015 survey by Ames & Gough, 5 of the 14 insurance companies interviewed planned to increase their professional liability insurance rates for architects and engineers in 2016. However, healthy competition has forced many providers to keep rates steady throughout 2016.

The 19 companies that represent more than 80% of the market in professional liability insurance for US architects and engineers participated in a 2016 survey by Ames & Gough. 53% of insurers didn’t change their premiums, while 32% actually had rates decrease. Only 16% increased their premiums.

The survey also revealed that some insurers are expanding the range of what they’re willing to cover. For example, some added endorsements for cyber risk and drone usage. However, Dan Knise, the president and CEO of Ames & Gough, says that stand-alone cyber insurance policies offer better protection for clients against ransomware, data damage, and credit monitoring among other first-party exposures.

In spite of being in a very competitive market, insurers still maintain a rigorous underwriting process. The survey found that a history of recent claims plays a major role in determining the professional liability insurance rates for a specific company, considered a top underwriting factor by 95% of the surveyed insurers. Moreover, 84% considered top factors to include the type of project and 47% the type of work or service provided.

The claims frequency varies depending on the type of claim, just 7% of insurers had an increase in claims frequency. Specific segments of policies, such as the ones for companies working on residential buildings and schools, accounted for a higher number of claims.

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