How is the Professional Liability policy premium determined for architects/engineers? The actual premium and how the premium is determined will vary with each insurance company based on the actuaries of the company. The insurance companies do take into consideration all of the factors in the application and additional information provided by your firm. However, there are factors that do determine the premium with most insurance companies.
Your firm’s billings will be a part of the premium determination. This will vary with the insurance companies on what billings they use and the averages used. For example, some insurance companies will use weighted averages of the past two years of billings and the projected billings. Other companies will use the past three years for weighted billings and not projected billings.
Project types are a consideration for insurance companies in the premium. If your firm has condos, that will increase the premium and some companies won’t provide quotes based on the percentage of condo projects. Most insurance companies rate more favorably for commercial projects rather than residential projects.
Your firms discipline will be an influencing factor in the premium. Structural engineers may see a higher premium than mechanical engineers. A landscape architect or interior designer may have lower premiums than an architecture firm.
Claims history will play a part in the premium. If your firm does not have any claims this will be beneficial. If your firm does have a claim, the insurance company will look at how far back the claim was and the indemnity and expenses paid out. If your firm can provide a narrative of the details of the claim and lessons learned from the claim this is helpful to the insurance companies.
These are some of the main factors that will determine the premium for your firm. If you have questions please call or email your Professional Underwriter agent.