Important Clauses to Pay Close Attention To in the Architects and Engineers Professional Liability Policy
Yes it can be a lengthy policy to review but when renewing your policy or comparing policies here are a few key areas to review closely.
Definition of insured – This will vary with each insurance company and depending on who your firm is hiring they may or may not be covered under the policy. For example this policy wording includes independent contractor:
Insured Person means any natural person who:
- is the sole owner of, or is or was a partner in, the Named Insured or Predecessor Firm;
- was or is a member of the board of managers, director, executive officer, or shareholder of the Named Insured or Predecessor Firm;
- was or is an employee of the Named Insured or Predecessor Firm; or
- was or is an Independent Contractor, provided that such person is acting within the scope of their duties on behalf of the Named Insured or Predecessor Firm.
While this insurance companies definition does not include the independent contractor as an insured person.
The “hammer clause’ is also an area to be aware of. This insurance company requires the insured’s consent before settling a claim:
The Company will have the right to make, with the consent of the Named Insured, any
settlement of a claim under this policy. However, the Named Insured’s consent shall
not be unreasonably withheld.
There are some insurance companies that do not require consent from the insured prior to settling a claim. Be aware of that in your firm’s policy.
Another area to be aware of is the Extended Reporting Period options with the companies. Does the company have a long enough time period that you feel would be adequate for your firm.
Always read and understand your Professional Liability policy in full. If you do have questions about your firms’ policy please call or email your Professional Underwriters agent.