Design errors & omissions and evolving technology are among the most pressing challenges faced by today’s architects, engineers, general contractors, and other design professionals. To learn more about their need for Architects & Engineers Insurance, we spoke with Tameka Livatino, Underwriting Director, Professional Liability, Burns & Wilcox, Chicago, Illinois.
What are some of the greatest risks facing architects and engineers today?
T.L.: Design flaws have always been and always will be the greatest risk of an architecture and engineering firm. Other risks include cost overruns and the reliance on technology platforms to perform professional services. Often times, design platforms are created by others and relied upon by design professionals. If there is a problem with a project, there could be a question about whether it was caused by the project design itself or the technology. In addition, in this current age of inflation, material costs and the speed of delivery are coming more into play as a challenge. Media and press surrounding catastrophic events can also create a sense of uncertainty among design professionals, and specialization and experience are being looked at a lot more.
What should they be aware of relative to these risks?
T.L.: As an underwriter, one of the things we look at is whether their subcontractors are insured. From the architect or engineer’s standpoint, proper vetting of the professionals they are utilizing is critical. That goes for the technology service provider as well as the subcontractors.
What insurance policies can help architects and engineers respond to these threats?
T.L.: Architects & Engineers Professional Liability Insurance, polices have many layers of coverage that can respond to these threats. There is always going to be a bare-bones policy form, so the insured, broker and/or retailer should be looking for key coverage parts. For example, whether there is technology coverage, coverage for independent contractors, and cyber and privacy liability coverage. I think those are critical when reviewing and deciding on an Architects & Engineers Professional Liability Insurance policy. You get what you pay for, and that holds true for these policies. There are a lot of additional expenses that go with an errors and omissions claim that a firm would benefit from having covered. If they are not relieved of certain claim expenses, it could be detrimental to their operations, especially for a smaller firm. They also want to look at things like faulty workmanship, which is a critical part of covering the gap between Professional Liability Insurance and Commercial General Liability (CGL) Insurance for a contractor and other supplementary payments. There is currently an increased demand on policy limits, as well, and even smaller firms are being asked to carry very high limits, so Excess Liability Insurance may be needed.
What steps should these professionals take to complement insurance coverage from a prevention standpoint?
T.L.: Risk management is critical. Having an air-tight contract is the top priority. Also, proper vetting of subcontractors, staying current with design material and technology usage, and continuing education and training, are important.
How has COVID-19 affected the architects and engineers Insurance market?
T.L.: There are still some pain points with regard to the pandemic. Economic uncertainty among investors was at a high, and many projects that were started were put on hold because no one knew what was going to happen next. Things are revving back up, but inflation, interest rates and the economy are having an impact.
What are the greatest opportunities for brokers to get into Architects & Engineers Insurance?
T.L.: There is an opportunity for brokers to get into writing more contractors, specifically. A lot of artisan trade contractors are now being required to carry Professional Liability Insurance, whereas CGL Insurance was the focus previously. Brokers who sell CGL Insurance, in particular, have a great opportunity to cross-sell a Professional Liability Insurance policy to cover the gaps. Also, anytime there are contractual requirements there is an opportunity to be explored. General contractors, artisan trade contractors, design professionals — all of them have the exposure and should be targeted.
What services of Architects & Engineers Insurance are specific to Burns & Wilcox?
T.L.: Burns & Wilcox has access to many markets, including an in-house facility that can provide a broad suite of coverage enhancements. This in-house program has coverage features from errors and omissions to technology, technology products, and cyber, with various supplementary payments available. The exclusivity of the program provides the ability for Burns & Wilcox to obtain more tailored coverage for the client.
WHY YOUR CLIENTS MIGHT NEED IT: Provides financial protection against alleged professional negligence and also includes coverage for directly related bodily injury and property damage. Construction projects that have structural or other issues often can lead to lawsuits of at least $1 million.
PROTECTS AGAINST: A range of legal-, property- and injury-related exposures, including those resulting from the design professional’s negligence or error. Includes financial restitution for costs related to legal defense, material defects, bodily injury and property damage.
Expert opinion: “Anytime there are contractual requirements there is an opportunity to be explored. General contractors, artisan trade contractors, design professionals — all of them have the exposure and should be targeted.”
Burns & Wilcox has exclusive access to a program called ProContrsuct. This program offers a robust policy at competitive rates for Architects & Engineers and Contractors to Burns & Wilcox brokers. The ProConstruct form includes Errors & Omissions, Tech, Cyber, Pollution, Rectification Coverage, Protective and a list of other enhancements. The experienced underwriting team for the ProConstruct program offers Burns & Wilcox brokers an in house advantage by walking through the coverage needs of each and every Insured.