What factors are affecting your Professional Liability premium? The short answer is all of the factors in the application your firm has completed. But below are more details as to how the premium for Professional Liability policy for your Design Professional firm is determined.
Discipline – Are you an architect or an engineer? Depending on the types of services your firm is offering it can influence the overall premium. Architects are considered a lower risk than a structural engineer, therefore, rated lower.
Project types – This will vary with each carrier depending on what project types they are comfortable with. For example, a few carriers won’t provide a quote with even 1% condos as a project type, but some carriers will provide a quote even if you have 5% condos. The premium factor varies on the types of projects; a commercial building is given a lower rate than a single family residential with most carriers.
Reports, studies, master plans and opinions – Some carriers will provide a discount based on these types of services. So if your firm provides a report on a project, the percentage of billings that was attributed to the report can be included in this section. These are considered lower risk services by some carriers and are rated different than a design.
Billings – The billings factor varies from carrier to carrier on what billings they will use. For example, some carriers will use a past three year average, while others will use a past two year average with a one year projected. Again, this all depends on the carrier and how they have it set up in their rating system.
Risk Management – Carriers like to see that your firm is participating in risk management and will provide a credit for participation. Are you doing peer reviews, do you have a client/project selection process and do you obtain updated certificates of insurance from your sub consultants? These are some of the risk management that carriers are asking about.
Contracts – Carriers prefer to see that your firm is using a contract on all of your projects. If you do have a claim, it makes it easier to defend if all of the terms of the contact are laid out. Verbal contracts are not looked at as favorable because it’s your word against your client’s word.
Claims – If your firm has claims it is going to depend on the amount of the claim and how many years ago the claim was. Some carriers will look back five years on a claims history and some carriers look back ten years. It all depends on the carrier on how they will look at a claim. It is best to provide as much information on a claim as possible.
As always, please feel free to call or email your PUI agent to ask questions on how your Professional Liability policy is rated.