Choosing a Limit of Liability on Your Architecture/Engineering Firms Professional Liability Policy

These are the times you wished you had a crystal ball to predict the future and what a claim might cost your firm.  Unfortunately we do not have that luxury so choosing a limit of liability can be challenging.

There are several factors to consider when deciding on a limit of liability on your Professional Liability policy.  First and probably the most common is a contract requirement.  Many of your clients will have a requirement for a specific limit of liability amount on your policy.  However, this may not always be possible to attain.  If you have a smaller firm and the requirement is $10,000,000, this may not be possible because the insurance company may not offer this limit for your firm.  Also the insurance companies to have a maximum amount that they can offer no matter the size of your firm, therefore $10,000,000 may not be possible.

Another area to consider when choosing a limit of liability is the size of your firm as far as billings and the size and types of your firm’s projects.  It may not make sense if your firm is doing many smaller projects to carry limits of $5,000,000.  However, a limit that may be more reasonable is $1,000,000 or maybe even $2,000,000.

Affordability is a consideration when deciding on a limit of liability on your Professional Liability policy.  What is your budget for insurance premiums and what portion of that is for your Professional Liability policy?  The Professional Liability policy will likely be more costly than other types of commercial insurance.  However, be careful in this area, you don’t want limits so low because the premium is cheaper, that it won’t be enough coverage if your firm does have a larger claim.

Limits of liability on your Professional Liability policy are an important consideration in your firms business.  If you have questions about limits of liability please call or email your Professional Underwriter agent.