How to Choose a Professional Liability Insurance Policy for Your Design Firm
Business risks facing design professionals continue to grow. From straightforward disagreements over quality of work to the complexity of privacy breaches arising from the increasing digital interconnectivity of our personal and commercial lives, design firms are challenged to find the right protection for their businesses. Professional Liability insurance for design professionals, which includes a wide range of professionals in the design, architecture and construction industries, can help cover the broad range of risks facing this industry. When seeking the right professional liability coverage, it’s important to also consider coverage for risks that are unique to your design business.
With the specialized coverage of a professional liability policy, you can protect your design firm from the risks of working in unfamiliar geographic locations, adapting to new technologies, handling intellectual property, storing customer and employee data, navigating subconsultant relationships and other scenarios where allegations of professional negligence can arise.
“Traditional business insurance does not cover the risk design professionals have when providing professional services,” said Joseph Jones, Director of Risk Management for Professional Liability at Travelers. “A separate professional liability policy that covers the specific risks your firm may face when providing professional services will help protect your firm’s financial security.”
Here are six coverage areas you’ll want to look for in your professional liability coverage:
1. Network and Information Security Offense Coverage
Throughout a project’s lifecycle, computers, mobile devices, computer networks and internet services might be used to receive, store and transmit confidential client data. If a business has weak or compromised cybersecurity, it can expose sensitive client data to malware, unauthorized access and theft, and create the potential for legal liability claims by anyone affected by a breach.
Travelers Professional Liability insurance includes network and information security offense coverage to help protect architecture, engineering and other professional design firms from the costs associated with claims for events such as: the transmission of a computer virus, failure to control access to an insured’s computer or network, and the failure to prevent unauthorized access to, or use of, data containing confidential information of others.
2. Crisis Event Expense Coverage
Sometimes, a severe event can leave your design firm vulnerable. For example, a failed project, a significant data breach, a job site accident or even a personal legal problem can hurt your business if the media gets hold of the news. Bad press can damage your firm’s reputation, slow business volume and ultimately threaten your company’s financial security.
To help mitigate negative publicity and protect your firm’s reputation, Travelers Professional Liability coverage includes crisis event expense coverage, which helps cover the costs of hiring consultants to manage public relations and stakeholder communications through a crisis event. A “crisis event” includes events like the death or departure of the principal, potential dissolution of the insured firm, workplace violence or other event that has a significant adverse effect on the firm’s reputation.
3. Automatic Acquisitions Coverage
In today’s environment of buyouts, mergers and acquisitions, business structure and ownership can change quickly. When new business entities are formed or acquired, it is important for your professional liability coverage to include coverage for them from day one.
Travelers automatic acquisition coverage protects an entity acquired or formed during the policy period for 90 days or until the expiration date, whichever is earlier, for wrongful acts committed on or after the acquisition or formation date.
4. Design-Build and Joint Venture Coverage
Since design professionals may be subcontractors to the general contractor or the lead for a design-build project, the design-build project delivery system presents unique liability exposure for design professionals. For example, communications related to design changes can be misinterpreted or miscommunicated and lead to customer dissatisfaction.
Similarly, joint ventures present distinct liability risks. When two or more architecture, engineering or other professional design firms enter into a single agreement with an owner, this adds complexity to relationships, communications and contractual dynamics. More complexity has the potential to increase professional risk.
Travelers Professional Liability insurance includes design-build coverage and joint venture coverage, which allows firms to use these types of delivery models with the confidence that their insurance protection extends to liability arising from their participation
5. Pre-Claim Assistance
If you are concerned about a potential claim or that your design firm will be brought into a lawsuit, pre-claim assistance from experienced claim, legal and insurance professionals who focus exclusively on your industry can help guide you on how to prepare and respond.
Travelers Professional Liability insurance includes pre-claim assistance to cover expenses associated with the evaluation and mitigation of a potential claim. With a Travelers policy, your deductible is not triggered – nor are your policy limits reduced – for any dollars spent on this assistance.
6. Worldwide Coverage
If you work in international markets with unfamiliar laws and regulations, there is risk you may unwittingly expose your firm to potentially damaging lawsuits. Travelers worldwide coverage applies to wrongful acts committed, and claims made, anywhere in the world.
“Travelers Professional Liability insurance offers a variety of features that every design professional should consider including in their insurance coverage,” said Jones. Our professional liability (Errors & Omissions) insurance policies can be tailored to fit your business needs and cover design services you provide your clients, whether you are an architect, engineer, land surveyor, landscape architect, construction manager or technical consultant.
Additionally, Travelers Professional Liability customers have access to our expansive risk management resource library and services. If a claim should arise, our dedicated design claim team provides personalized and local claim services.
Other features and coverages, such as pollution, asbestos and mold coverage; loss of earnings reimbursement; spousal and domestic partner coverage; and mediation deductible credit, are part of our Design Professionals Liability insurance. Talk to your independent insurance agent or broker to learn more.
More Prepare & Prevent
Here are some suggestions for how to help protect your design firm from a lawsuit or professional liability claim.
Your design business can be at risk during the contract drafting and negotiation state. Get tips from Travelers Insurance on crafting design-build agreements that can help protect your business.
Knowing what to expect from a design professional liability claim can help your design firm through the process and help your design firm protect against potential claims.