Adequate Limits

What are adequate limits of liability for my architecture/engineering firm on professional liability? This can be a challenging question because you don’t know if and when your firm will have a claim and how much the insurance company will be paying out on a claim on behalf of your firm. Here are some suggestions as to determine, as best as possible, limits of liability on your firms professional liability policy.

What are firms similar to your firm carrying for limits of liability? Not every firm is going to be exactly like your firm but it is always a good indication of limits of liability when a firm has comparable billings and projects types. If you know or can find out the limits of liability that other firms have for limits of liability to help determine your firm’s limits of liability on your policy.

Does your firm have a contract requirement for specific limits of liability? From time to time contracts will have a required limit of liability. Keep in mind that your firm wants to make sure that the limit of liability is reasonable for the project type and construction value. If your firm that has a project that is a total construction value of $100,000 and the client is requiring your firm to have limits of $5,000,000 per claim, this probably doesn’t make sense. Use your best judgment on the contract requirement.

If your firm started a policy with lower limits of liability and your firm’s billings continue to grow, it may be time to increase the limits of liability on your policy. Your insurance company, at renewal, will typically offer higher limits of liability on the renewal quotes.   This may be a good time to consider increasing your limits of liability.

If you have any questions with regards to limits of liability on professional liability for your architect/engineer firm please call or email your Professional Underwriters agent for assistance.