Why is my Professional Liability premium different from another design firm that does similar work?
This question comes up quite a bit because your design firm may be doing similar work and projects as another design firm. It is not possible to compare apples to apples when looking at Professional Liability premiums of your firm versus another firm.
There are several reasons that your premium will not be the same as another firm. First being that you may have different insurance companies. Every insurance company has their own rating system and rates that they have filed with each State and therefore they will be different. Your firm may also have different limits and deductibles than the other firm.
Keep in mind that the insurance companies look at the Professional Liability renewal application as a whole when rating your policy. They take into consideration the project types, services provided (architect/engineer), clients, contracts used, billings from this year and past fiscal years, project delivery methods, risk management practices and retroactive dates.
Another large factor in determining your firm’s premium is if you have had claims or not. If your firm has had claims the insurance companies review how many claims, the types of claim, the dollars paid out on the claims and the expenses associated with the claim. If your firm hasn’t had any claims this won’t be a factor. Additionally, a pre-claim, unless it turns into a full blown claim, will not be factored into the renewal premium.
There are insurance companies that are surplus lines companies and sometimes the premium will be lower but may also have exclusions that an admitted insurance company may not have. This could be another driving force of the premium difference from another firm.
When getting your Professional Liability quotes be sure to review the factors that do have an effect on your premium. Also please be sure to call or email Professional Underwriters with your questions.