Benefits

Professional liability terms to understand for architects/engineers

There are many terms in the policy to review.  Here are some terms that are important to review and understand in your firm’s policy.

Limits of liability are the limits on the policy for each claim and aggregate.  The per claim limit of liability is the limit, as it states, for each claim.  This is the maximum, including claims expenses, that the insurance company will pay out for each claim.  The aggregate limit of liability is the maximum the insurance company will pay out on all claims within a policy year.  An example of limits of liability are $1,000,000 per claim and $2,000,000 aggregate.

Waiver of subrogation, which is typically requested on the workers compensation policy, is included in most professional liability policies.  However, the waiver of subrogation must be included in the contract for it to take effect on the professional liability policy.

First dollar defense deductible may also be referred to as a damages only deductible.  This means that your firm pays the deductible only if there is a claim settlement.  If it a straight deductible it may also be referred to as damages and expenses deductible. This means your firm pays the deductible as soon as a claim is opened.

Professional liability policies are claims made policies.  Which means that the policy that is in place at the time of the claim is the policy that will pay on the claim.  However, there must be a policy in place at the time of the project (retroactive date) and at the time of the claim.

Your firm’s policy may include a knowledge date.  This is the date that your current insurance provider ‘took over” on your firm’s professional liability policy.  There should also be a retroactive date on the policy and if it states N/A, that means the policy has full prior acts.

If your firm has any questions with regards professional liability terms please call, or email, your Professional Underwriter agent for assistance.

Previous Post
Delay Claims: Introduction
Next Post
2024-25 A/E PRONET ACEC SCHOLARSHIP RECIPIENT