Poll: For INDEPENDENT Specwriters only

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Author Message Jerome J. Lazar, RA, CCS, CSI, SCIP Senior Member Username: lazarcitec Post Number: 239 Registered: 05-2003 Posted on Monday, July 31, 2006 - 03:04 pm:    How many carry Liability Insurance? Ronald J. Ray, RA, CCS, CCCA Senior Member Username: rjray Post Number: 61 Registered: 04-2004 Posted on Monday, July 31, 2006 - 03:16 pm:    Although I am licensed in a few states, I don't carry professional liability insurance, nor do I seal and project manuals, even though I hold the copyright to the work I prepare. Jerome J. Lazar, RA, CCS, CSI, SCIP Senior Member Username: lazarcitec Post Number: 240 Registered: 05-2003 Posted on Monday, July 31, 2006 - 03:25 pm:    Ronald, that has been my policy as well, however I am receiving more requests from clients that I carry liability insurance...so I would like to know from my peers who has it (or does not) and what are the pros and cons. Ronald J. Ray, RA, CCS, CCCA Senior Member Username: rjray Post Number: 62 Registered: 04-2004 Posted on Monday, July 31, 2006 - 04:02 pm:    Jerome, I think your attorney would be a better source of helping you determine the pros and cons of carrying professional liability insurance. I had one client request that I carry professional liability insurance for a project. When I quoted them a fee that included me carrying the insurance, they changed their mind. I was not willing to absorb that kind of overhead for one project or one client. The premium can be a big hit, amounting to several thousands of dollars a year. Robert E. Woodburn Senior Member Username: bwoodburn Post Number: 123 Registered: 01-2005 Posted on Monday, July 31, 2006 - 05:19 pm:    This came up several times in SCIP discussions in the years I attended SCIP's annual meetings (which was in the latter years of the previous millenneum). As I recall, only one independent specifier in the group ever reported being covered by liability insurance, because his client required it, and ultimately the only way he could obtain coverage was for his client to include him as an additional insured on its own liability coverage. That made sense anyway, since the client sealed the documents and bore the responsibilty. So, if your client insists that you be covered, explore that possibility. After all, specs are just one part of the total professional responsibility, so it makes sense that the coverage for them be under the same umbrella. Also, if there is an additional premium for that coverage, your client will know what it is, and be able to pay it directly. (If you have to pay it, it should be added to your fee, which at best would be a wash for your client.) The problem in specifier's E&O coverage seems to be this: Underwriters can't figure out how to insure something unless they have some kind of way of estimating the risk, which usually means they need a claims history. Trouble is, no one keeps track of claims against independent specifiers -- probably because they carry no E&O insurance as specifiers. In a way, it's a chicken-and-egg problem. Frankly, I don't think it would make any sense for specifiers to be insured independently of their clients, unless they are practicing as associate architects, signing and sealing the specifications, and thereby taking on the corresponding responsibility. But that would be a joint venture relationship, not a consulting role. Jerome J. Lazar, RA, CCS, CSI, SCIP Senior Member Username: lazarcitec Post Number: 241 Registered: 05-2003 Posted on Monday, July 31, 2006 - 07:03 pm:    Robert, yest I have done that when the Architect is my client, but on several upcoming projects, the developer is my client and there the liability issue gets more confusing. But, you are right we do not pay for it out of our pocket either way, if they want us to have insurance it is at their expense....most of the time after they investigate the cost they drop the requirement. Doug Frank FCSI CCS Senior Member Username: doug_frank_ccs Post Number: 156 Registered: 06-2002 Posted on Tuesday, August 01, 2006 - 08:16 am:    While I’m not an Independent, I’m a SCIP Affiliate, I wanted to respond to this discussion. A few years ago I was asked (by one of the big cheeses at CSI) if our insurance carrier gave us a discount because I am a CCS. This was part of an effort at that time to identify benefits of certification. Our carrier’s response was “What is CCS?” After it was explained to him, no additional discount was forthcoming. Has anyone, in your quest for coverage, asked about (or been offered) a discounted rate due to certification?? Jeffrey Wilson CSI CCS New member Username: wilsonconsulting Post Number: 1 Registered: 03-2006 Posted on Thursday, August 03, 2006 - 05:14 pm:    I have carried professional liability for several years -- and I sleep better at night knowing the coverage is there if a client of mine is ever brought into a lawsuit and there are any questions that involve the specifications. It took a while to find coverage, but a major player in E&O insurance for A&E firms offers a policy for "Construction, Technical & Planning Consultants." My agent and the insurance company reps I have spoken with have a good understanding of how specifications relate to the industry, how independent specifiers operate, and the relationship between the spec consultant and the primary professional. (I'll be happy to provide the name of the insurance company if this isn't considered a commercial plug. From my research, they appear to be the only one offering a policy that includes spec writers as insureds.) My standard agreement, of course, includes a provision indicating that the design professional retains responsibility for the documents -- my role as consultant is to document the architect's decisions. This doesn't give me sufficient comfort, though, knowing how construction claims can escalate rapidly to be aimed at every project participant. I consider the premium well worth the expense (it runs between 2 and 3 percent of gross if memory serves). I also receive expert advice on matters related to liability, and unlimited review of agreements by some very knowledgeable people. I am continually amazed to learn how few consultants do not have liability coverage. In my view, the stakes are very high considering the exposure. This is particularly true for consultants involved with project types involving high risk or high claims rates (high-rise construction, condos, etc.) Ken Moore, FCSI, CCS, SCIP Advanced Member Username: kjmoore Post Number: 5 Registered: 06-2006 Posted on Monday, August 14, 2006 - 10:17 pm:    Jeffery Please email me name and contact information of insurance company for E&O insurance. Also your disclaimer statement. A few years back, CSI promoted a Company that offered E&O insurance for a reasonable amount. The reasonable about and coverabe only lasted one year. Ken Moore, FCSI, CCS, SCIP Senior Member Username: kjmoore Post Number: 6 Registered: 06-2006 Posted on Monday, August 14, 2006 - 10:23 pm:    Jeffrey Addendum No. 1 Email address: usconsulting@earthlink.net Jerome J. Lazar, RA, CCS, CSI, SCIP Senior Member Username: lazarcitec Post Number: 255 Registered: 05-2003 Posted on Monday, August 14, 2006 - 11:45 pm:    Jeffrey me too lazarcitec@msn.com Mark Gilligan SE, CSI Senior Member Username: markgilligan Post Number: 93 Registered: 05-2005 Posted on Tuesday, August 15, 2006 - 04:42 am:    Be careful what you ask for. Not so long ago E&O insurance was cheap for engineers and architects. Then the lawyers found out that they could collect major monies from these policies by suing everybody. next thing you knew it the premiums rose quite high. There are a number of engineers and architects who believe that they are less likely to be sued if they do not have E&O insurance. Kenneth C. Crocco Senior Member Username: kcrocco Post Number: 59 Registered: 04-2003 Posted on Tuesday, August 15, 2006 - 06:19 pm:    I am insured. Regarding lawyers collecting major money as mentioned above: It is my opinion, that the above comment by Mark is correct. But I also suggest there is a balance here. I am very satisfied with the service I get from an insurance company. It is worth the premium. It is also my opinion that we as a profession need to seriously react to the current and potential suits being generated over mold. Manufacturers are really trying to take advantage of the situation and it needs to be addressed before suits over mold get out of control. It only takes three "conditions" to generate a suit: an owner, some mold, and a lawyer. All we need to do is eliminate one of the three. Anonymous   Posted on Tuesday, August 15, 2006 - 07:48 pm:    I vote for the elimination of lawyers! Anonymous   Posted on Thursday, August 17, 2006 - 05:08 pm:    I've just started independency (after being in-house) and like Jeffrey and a few other area independents, I too sleep better at nights knowing that I have coverage (along with an extensive 12 pg. standard agreement). In fact, I was able to receive quotes from three different companies (via two different brokers). A couple thousand dollars a year is just the cost of doing business...along with your standard business liability insurance (which all of you have...right?)...even if you work out of a home office. And...I'm not even licensed. True, the fact that I do have coverage, is an attraction for "ambulance chasers" to pursue quick settlements, but as I read in another thread about a specifier being individually sued some time ago, it still provides that "safety net" for me in that one instance that could ruin me (and my family) personally. Regarding the mention of mold, I agree that something needs to be done, but also realize that in the context of the original question, mold along with other haz-mat is generally not covered by E&O (and most if not all personal home) policys. Regarding being added as an additional insured under architect's policy, first how can you be ensured that architect will do that, and second that architect's insurer permits adding someone that they have no clue about? The broker that I rec'd coverage thru, explained that typically additional insureds can't be added...even to my policy...primarily based on added (and somewhat unknown) risk to architect's insurer. Even if insurer did accept add'l insureds, certainly not for a specific project without any add'l premium...which will be paid by the Architect? Sure, the broker may have been self-serving with that statement, but we, as individuals, are in the best position to "protect" ourselves, whether it's language in our agreements, obtaining own E&O, or just outright refusal for working specific type projects (e.g., condos); depending on architects for our E&O coverage is...almost...naive. Besides, if an architect had to choose between insured or non-insured consultant (everything else being equal/close), I'm confident that the insured would be chosen...despite fee differential. Thus, in a way, I'm justifying (to myself) my high(er) fees. David Stutzman Senior Member Username: david_stutzman Post Number: 46 Registered: 07-2002 Posted on Thursday, August 17, 2006 - 05:50 pm:    I would like to know where you found a policy for a few thousand dollars per year. What kind of coverage did that buy? The last quotes we had ranged from $25 - $40K per year for $1MM coverage. It took 6 months to get the first quote and then several months for each quote after that. Anne Whitacre, FCSI CCS Senior Member Username: awhitacre Post Number: 383 Registered: 07-2002 Posted on Thursday, August 17, 2006 - 07:50 pm:    I was in the same situation as DAvid when I consulted -- I was getting quotes in the $20 to $30K for $1 million in coverage, and that was back when that was about 45% of my yearly gross. I did have personal liability insurance, and on two projects I was included in a project umbrella policy. I paid the additional premium for my coverage, which usually was about $500 per year for each project. on the other projects, my letter agreement limited my liability to the total fee earned for the project. I was fortunate enough to simply not have any problems during the decade I consulted. John Bunzick, CCS, CCCA Senior Member Username: bunzick Post Number: 569 Registered: 03-2002 Posted on Friday, August 18, 2006 - 09:35 am:    The irony (?) of those figures is that I worked for a 25 person architecture firm in the mid-90s where I did the "shopping" for the firm's liability insurance. If I recall correctly, the premium was about $15K for $1 million coverage, but the billings were obviously substantially more. I'm not an independent, but I'm wondering if there would be merit for a committee from SCIP to sit down with a couple of the primary insurers, explain the business, certifications, qualifications and the like, and see if they'd set up a program for independents that may be more in relation to the real risks. Nathan Woods, CCCA Senior Member Username: nwoods Post Number: 116 Registered: 08-2005 Posted on Friday, August 18, 2006 - 11:15 am:    John, that is a pretty good idea. I belong to several "hobby" organizations whose primary benefit to members is liablity insurance. One such organization is the Acadamy of Model Aeronautics (AMA) at: http://www.modelaircraft.org/ My annual dues are under $60/year and they provide: Liability Coverage for the Operation of Model Aircraft, Boats, Cars, and Rockets $2,500,000 Comprehensive General Liability Protection for model activities for members, clubs, site owners, and sponsors $25,000 Accident/Medical Coverage for members $10,000 Maximum Accidental Death Coverage for members $1,000 Fire, Theft, and Vandalism Coverage for members Primary Site Owner Insurance ‑ up to $5,000,000 each location David Axt, AIA, CCS, CSI Senior Member Username: david_axt Post Number: 704 Registered: 03-2002 Posted on Friday, August 18, 2006 - 01:02 pm:    Nathan, I am really puzzled how a model airplane can cause so much damage that you would need liability insurance.....but that is a discussion for another thread. I wonder if CSI or SCIP has ever looked into liability insurance for their members? Nathan Woods, CCCA Senior Member Username: nwoods Post Number: 117 Registered: 08-2005 Posted on Friday, August 18, 2006 - 01:17 pm:    Not to hijack the thread too far, but most of planes flown are high powered gasoline or electric planes that travel over 100 miles per hour with large spinning guillotines in the nose and guided by a tenuous control link made with discount radio components assembled by children in developing countries.... Even non-powered flight, such as gliders, are reaching astonishing speeds (over 300 mph). There are some video links here: http://www.sloperacing.com/results/ds-speeds.htm These gliders fly very close to the ground and are made of carbon fiber and Kevlar and can go THROUGH plywood barriers when a piloting error occurs. It's extremely fun and addicting to perform, but terrifying to watch. Ron Beard CCS Senior Member Username: rm_beard_ccs Post Number: 151 Registered: 10-2002 Posted on Friday, August 18, 2006 - 03:45 pm:    Specification writing, when practiced by an independent person/unity, is a technical service not a profession requiring a state issued license. So why should we be required to provide a professional liability insurance, especially when the professional of record has already bought and paid for it? The issue of insurance for independent specifiers has been bantered about for years, both inside and outside of SCIP. Secondly, every spec consultant should have a clasue in their contract agreement that their work is subject to the review and acceptance of their client, the architect-engineer. I do not contract with non-licensed clients, ie, builders, developers, etc. The exception is manufacturers. If you are looking for peace-of-mind, I advise two things: (1) write concise, well coordinated spex (this of course will not protect you from a hell-bent attorney but it helps); and (2) place all you assets in trusts (this will protect you) (Also, there are a whole host of other valid reasons to do so anyway.) It costs money to process legal actions. No accessable money, no lawsuit. End of situation. Works for me. Ron (I just completed my 30th year as an independent specifier in May) Anonymous   Posted on Friday, August 18, 2006 - 03:44 pm:    From 2nd Anon...For AIA members, there's a 2005 prof liab insurance survey on AIA website that contains a lot of information, including some very generalized premium info. Maybe because I have no "track record" of gross revenues (although in the appl I guesstimated $100K annual for lack of any other round #)...nor claims, that I was able to obtain coverage ($1mil per/$2mil aggr/no deduct) for $2,000/yr. (it is one company that is listed in AIA survey); I'm unsure if it's proper to mention specific company names (Colin?), but I did get a quote from two other companies, one of which is NOT listed in AIA survey. Each companies quote varied in deductible & other coverages features/limitations in addition to starting dollar limits, but surprisingly were very close in premium for similar dollar limits. Interestingly, my homeowner's insurance company (a well-known one) refused to quote a premium...some vague excuse/reason of not covering what I do...or something to that effect. Yes, my 12 pg contract (letters of agreement are greatly discouraged by insurance companies; although, I'm not sure what a letter of agreement is) also limits my liability (even it's my fault) to my fee. Again not to wander, but my father-in-law started into model aircraft, building a few, until he discovered the liability involved (if he wanted to fly them) and insurance needed. Does not take much for some one/thing to interfere with one's radio signal and the aircraft goes off and hits someone. Anyhow, if Colin permits naming names, I will follow-up with the companies that I rec'd quotes from (and the one I didn't too). John Carter (Unregistered Guest) Unregistered guest Posted on Saturday, April 28, 2007 - 09:32 am:    We have liability insurance. Clients rarely asked for it when we did not have it, but then we incorporated the business and our attorney talked me into getting it. Now that we have it, seems like more clients are requiring it. It was difficult to find, and an uphill battle to educate the insurance brokers as to what it is we specifiers do. It is a very reasonable cost - and a business expense. Also easier to sleep at night. The alternative (if no insurance) is to write an agreement that makes your architectural client totally responsible for your work. But you might have to hire an attorney just to defend that clause.