Credit: Mike Morgan
Yes, having multiple insurance policies means paying more for proper coverage, says broker Barbara Sable. There are, however, “more entrants in architects and engineers professional liability insurance,” she notes. “That’s keeping rates lower than they might otherwise be.”
BIM management, product design, eco-consulting … chances are, your firm is doing more than just designing buildings. Which means a blanket liability policy is most likely insufficient. How do you determine what coverage you need? Architect asked Barbara Sable, an Ames & Gough broker who specializes in liability protection for architects and engineers. Before arriving at Ames a decade ago, she worked at Victor O. Schinnerer & Co., an underwriting management company. Sable likes dealing with architects, whom she describes as having a great blend of creativity and analytical capability. “You get a chance to discuss business in a different way,” she says.
How has the changing nature of architectural practice been addressed in the insurance industry?
Starting with 1997 AIA documents, we saw an evolution that allowed architects to provide a broader range of services. It muddied the waters. There’s less clarity as to what an architect does. If you read the definition of “professional services” in the policies of eight major insurance companies, they’re all different.
What new services are most prevalent?
We see a lot more specialty consulting—sustainability, furniture design, modular housing. If an architect is experienced in hospital design, they might be working with their clients in a business consulting mode. Architects are helping their clients understand how to maintain their systems better: facilities management, operational, and commissioning type stuff. We have clients doing BIM modeling management as a stand-alone service. That needs to be looked at from the point of liability. It becomes an IT type of exposure.
Isn’t modular housing pretty close to traditional architectural practice?
There’s little clarity as to what modular housing might mean. How much is fabricated off-site, and how much is constructed on-site? How many variations are there? That’s what an underwriter is interested in. One might be concerned that if you make a mistake in a prototype, you make a thousand mistakes. Some underwriters are concerned that it’s more of a product than a service.
And product design liability is different than architectural design?
Any time you might be doing product design, we recommend having your liability and general coverage with the same insurance company. If there’s a debate as to whether [product design] is a professional liability exposure or general liability exposure, it’s within one insurance company, not a debate between two companies.
What should the architect who is engaged in, or considering, these services do?
If you’re doing something nontraditional, have a conversation with your broker. Explain what you intend to do, or what you are doing. Verify that you have coverage. Insurance is nobody’s favorite topic.
Is there an upside, insurance-wise, to nontraditional practice?
Expanded services allow you to differentiate yourself from your competitors and allow you to strengthen your client relationships. Studies have shown that the more you strengthen your client relationships, the less frequently you have a claim. That can be a favorable development in the eyes of an underwriter.
But can there be additional costs of insuring for these additional services?
Everyone is concerned about the price of their coverage. Some architects hesitate to have an open conversation with their brokers and insurers. They think, “If I tell them, it might cost me more.” That may be true, but you’re better off having that conversation—and having a covered claim.