How will a specific project affect my Professional Liability premium?

specific projectOur agency often gets the question of how a specific project will affect your firm’s Professional Liability premium.  There isn’t an easy answer to this question because of so many factors that go into rating a Professional Liability policy.

When the carriers are working on rating your Professional Liability policy, they do ask on the application for the past fiscal year information.  So if you are working on the project now there isn’t any way that the carrier can predict how that will change your premium going forward.  The carriers don’t know what percentage of your billings that project will be or if your billings will increase or decrease.  Additionally, claims, disciplines, risk management, sub consultants, and other project types all play a roll in determining your firm’s premium.

One of the major factors to consider, when the question is asked, is that there is really no way to predict the future.  It would be like knowing how the stock market is going to perform in the next year or two.  The carriers have many factors to consider when they are rating your firm’s policy and one of those could potentially be having standard industry rate increases or decreases.  Just like the stock market, the carriers have highs and lows and have to rate accordingly.

Some carriers may be willing to offer an approximate rate increase percentage due to a project, but it is very important to keep in mind that this is just an estimate.  In fact, most carriers are reluctant to provide an approximate rate increase because there are so many unknowns when it comes to potential premiums.

As always, please feel free to call or email your PUI agent to ask questions about exclusions on your Professional Liability policy.

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