Limits of liability on a professional liability policy for architects and engineers-

You firm may receive a request for a higher limit of liability on your professional liability policy.  There are a few issues to consider when looking at the request for the increased limits of liability.

The first matter to consider is do the limits make sense for the project or your services on the project.  For example, the project may be asking for $10 million in the contract.  However, your fees proposed for the project are $10,000.  The limit of liability amount requested on the project is much higher than what your firm’s risk is on the project.

Another area to consider is does your firm already have high enough limits of liability for the work being performed.  Again, look at what your firms’ fees are in relation to the limits of liability your firm already has in place.

The insurance company may not have the higher limits available that are being requested for the project.  The project may be asking for $25 million, and your firm currently has $5 million.  The insurance company that your firm is insured with may have a maximum of $10 million on limits of liability.  In this case there may be other insurance companies available to ‘stack’ the limits of liability to get to the $25 million.  The other insurance companies will be in excess of the current insurance companies limits to meet the $25 million limit of liability requirement.

If your firm’s insurance company is able to offer the higher limits of liability requested, another consideration for your firm is the premium affordable compared to what your firm is billing on the project.  In some cases, depending on the project, your firm may be able to get a project endorsement, which can be charged back to the client.

If you have any questions about limits of liability on your firm’s professional liability policy, please call or email your Professional Underwriters agent for assistance.