Contract issues to be aware of as an architecture/engineering firm-

There are many nuances when it comes to contracts for architects/engineers. Be sure to have your insurance company and your firm’s legal counsel review contracts that seem out of the ordinary. When reviewing contracts we aware of some of these issues that may arise.

Contractual liability is not covered under a professional liability policy. Some general liability policies will cover the contractual liability but this is really more of a contract requirement for general contractors rather than design professionals.

If your firm has the master agreement and your firm has sub consultants be sure, your sub consultants have similar insurance policies and limits of liability that your firm is required to provide. For example, if your firm is required to have professional liability for limits of $1,000,000 per claim and $2,000,000 aggregate, this should be the same requirement of your sub consultants. Not only having the requirement but also keeping up to date on certificates of insurance for your sub consultants is key.

Professional liability policies will not cover defense of your client. Some contracts that will ask for defense to be covered and the professional liability policy will not pay for your clients’ defense. Your firm can agree to it, just be aware that the policy will not cover this expense.

Do not agree to services, once into the project, that are outside of the scope of services outlined in the contract. This opens your firm up to exposure that is outside of what is contractually required and can cause issues in the end.

The key to contracts is to know them inside and out and to have it reviewed by not only your firm but by the insurance company and an attorney. If you have any questions about contract reviews please call or email your Professional Underwriters agent for assistance.