Architect Professional Liability Insurance
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Architect professional liability insurance, also referred as architects professional indemnity insurance, architects PI insurance, and architects PII insurance, protects your architectural firm and employees against professional-related claims. For instance, when you make an error or act negligently, professional insurance for architects will protect you from emerging claims. Professional liability insurance is different from general liability insurance in the sense that it only covers claims arising from your errors and omissions as a professional architect.
On the other hand, general liability covers things like property damage or accidents that result in injury. Furthermore, general liability insurance policies are relatively standard compared to professional liability insurance. Professional liability insurance has more specialized and diverse functions. For better understanding, here are some of the areas professional liability insurance covers.
Negligence
Most claims arising from professional liability result from the architect's being negligent, which in turn result in the failure to meet client expectations. Clients might file a claim if they experience economic or financial losses. Professional liability insurance covers negligence claims. It will help you shoulder attorney fees, other legal costs, and settlements.
Substandard Work
As a skilled architect with a lot of experience, you cannot deliver below-average projects that are way below expectations. However, some uneducated clients might want you to do things according to their wishes. While they think they are correct, what they want could be impossible from a professional point of view. This results in numerous misunderstandings in the course of the project. No matter how much you try to clarify things, a client might file a claim against you. Architects and engineers professional liability insurance will protect you against such claims.
Non-Traditional Practices
Architects Errors and Omissions (E&O) Insurance
When a client files a claim against your architectural business, you need to prepare for consequences. Generally, lawsuits against architects are costly and could result in severe financial losses. Without architects errors and omissions insurance, also known as architect E&O insurance, you risk losing a lot of money on settlements.
Whether you make an omission on the project's blueprint or the client doesn't like the color scheme you used, architect e&o insurance can help pay legal fees that could otherwise affect your operations. Not all building designs go precisely as planned, which means the chances of a lawsuit are high. Therefore, you should get architect insurance cover to protect your architectural business against these claims.
How Much Liability Insurance Should You Get?
A $1 million general liability insurance provides basic protection against property damage, personal injuries, slander, libel, and copyright infringement. However, $1 million general liability might not be enough and it’s best if you decide to get more. This is because personal injury claims, property damage claims, and copyright infringement claims can be worth more than $1 million. And so, decide to get a $2 million general liability coverage.
How about professional liability insurance? Is $1 million - $2 million coverage enough? The answer is no. To understand why, let’s take a look at some examples of professional liability claims against architects and their cost.
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An architect in charge with the design of a mixed-use development in Washington D.C was sued by the contractor for $5 million. The claim was filed because the architect submitted design documents with substantial errors and omissions
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Princeton University sued a New York city architectural firm for a staggering $10.7 million because the defendants were careless with the project and took long to finish it
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The Massachusetts Institute of Technology sued a renowned architect for $300 million because the completed project had defects such as leaky springs, cracked masonry, and mold buildup.
As you can see from the above examples, professional liability claims involving architects are worth more than $1 million. And so, the smart thing to do would be to find a carrier that underwrites a professional liability insurance offering more than $5 million in coverage.
Hold Harmless Agreement for Architects
General liability and professional liability can provide a helping hand if ever a client sues your business. However, both only cover costs and won’t help to salvage your business’s reputation. Prevention is better than cure. And so, consider making your client’s sign a hold harmless agreement.
A hold harmless agreement is a statement which you can include on a project’s contract. There are two types of hold harmless agreements - unilateral and mutual. Once signed, a unilateral hold harmless agreement will lessen the chances of the client suing you for their loss. On the other hand, a mutual hold harmless agreement, if signed, will lessen the possibility of you and the client suing each other.
Hold harmless agreements aren’t illegal. However, they can be voided. The legality of a hold harmless agreement can be contested when:
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During negotiation, you have an unfair advantage over the client
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The wording of hold harmless agreement is too broad
Always include a hold harmless agreement in the terms of a project’s contract. By doing so, you can further mitigate risks even if insurance is ready to help. Hold harmless agreement will make it less likely for you to file claims. This in turn will allow you to enjoy cheaper premiums or avail special offers from the carrier.
Architect Commercial Auto Insurance
As an architect, traveling is part of your job. And when using your vehicle for work, your personal car insurance premiums might suddenly increase. If this happens, consider switching to commercial auto insurance. Alternatively, it might be possible to upgrade your personal car insurance to commercial auto insurance.
Commercial auto insurance has auto liability coverage that gets into action if you caused an accident and injured third parties or destroyed property. This coverage will shoulder lawyer fees, other legal costs, and compensation to affected parties.
Other Useful Insurance Policies: Commercial Property, Workers Compensation, and More
General liability and professional liability are enough if you’re an independent architect. But if you’re running an architectural firm, consider buying more protection. Insurance policies that will be practically useful for your business are:
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Workers compensation insurance
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Employer’s liability insurance
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Commercial property insurance
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Cyber liability insurance
Workers Compensation Insurance
Your architectural firm has a lot of employees dealing with building projects, financial records, marketing, and other tasks. Employees can still get injured though their work isn’t as risky as that of window cleaners or landscapers. Common injuries are carpal tunnel, stiff neck, and chronic back pains.
If injured employees need to take a break from work to recuperate or need money to get treatment, then know that you have the obligation to shoulder costs. Of course, using your architectural firm’s funds is out of the question. This is where workers compensation insurance becomes handy.
Workers compensation insurance covers an injured employee’s treatment, medical bills, and after-hospital visits. It also supplements lost income in case the employee can’t go to work for a while. The amount of allowance an employee can get from workers comp is equal to ⅔ of his or her average weekly wage.
Premiums for workers compensation aren’t cheap. However, you can do nothing but get this one. There’s a penalty for failing to get workers compensation insurance. For example, if your architectural firm is in Alabama, then you might get fined $1,000 multiplied by the number of days the injured employee didn’t receive any workers comp benefits.
What Do You Do If You Can’t Get Workers Comp for Your Architectural Firm?
Qualify for a state insurance fund if you can’t get workers comp. A state insurance fund allows businesses to pay for an injured employee’s compensation. In fact, it provides the same benefits workers compensation insurance offers. Contact the workers comp department of the state where your architectural firm is located to know the requirements.
Employer’s Liability Insurance
Employees might blame you for any work-related injuries. Particularly, they’ll say that you’re negligent in mitigating job hazards in the workplace. General liability won’t cover claims from employees. Instead, what provides coverage is employer’s liability insurance .
Employer’s liability insurance shoulders costs if an employee sues you. You can use the insurance money this policy provides to pay for attorney fees, legal costs, and compensation to the aggrieved employee.
You can add employer’s liability insurance to workers comp insurance. However, don’t do this. Are you asking why? Only a few know this but in most states’ workers comp laws, employees are prohibited from filing a claim if their employer has workers compensation insurance.
Commercial Property Insurance
You’ll suffer heavy losses if your architectural firm’s building gets damaged or totaled by fire. Other causes of damage might be vandalism, theft, riot, or extreme weather. Consider getting commercial property insurance because it will help a lot.
Commercial property insurance will help you reconstruct the building if it burns to the ground. It will also take care of repairs if the building got damaged by fire, riot, theft, vandalism, and other covered perils.
Understand that basic commercial property insurance has two loopholes. For one, it doesn’t cover business equipment and other important materials inside the building. Secondly, it doesn’t provide coverage if you’re renting a commercial space.
To solve the first loophole, carriers allow you to get optional coverages namely, business equipment and stocks and contents coverage. Business equipment coverage will provide money if computers and other work tools get damaged or lost because of fire, theft, vandalism, fire, and other covered perils. On the other hand, stocks and contents coverage will cover the cost of destroyed blueprints and other important documents and materials inside your architectural firm’s building.
The second loophole is solved by rented premises coverage. Commercial property insurance with rented premises coverage does either of two; reimburse the property owner’s expenses for repairing or rebuilding a damaged rented space or give you money so that you can get the rented space rebuilt or repaired.
Cyber Liability Insurance
If your architectural firm uses a website or any other related platform to market services and collect payments, then decide to get cyber liability insurance. This policy will be very useful if someone breaches the system and sensitive information such as client credit cards, addresses, phone numbers, and bank account numbers are exposed.
Cyber liability insurance will shoulder lawyer fees, other legal costs, and settlements if affected clients file a lawsuit against your business. It will also cover payments for public relations needed to inform concerned stakeholders about the breach.
Do You Need Builder's Risk Insurance?
Most architectural firms only design a building project. They don’t execute the plans nor oversee the construction. Builder's risk insurance is only for entities or individuals who are directly involved with a project. In this sense, your architectural firm doesn’t need builder's risk insurance
On the other hand, if your architectural firm is big and offers construction services, then get builder's risk insurance. This one will cover costs if something wrong happens and the construction project or materials incurs damage.
Architect Insurance Cost
The average architect insurance cost is $48 per month or about $576 per year for a small architect's $1m general liability insurance policy. Architect insurance is vital because it protects architects against lawsuits that could result in severe financial losses and its liability insurance cost is rather affordable in most cases. To give you an accurate estimate of architect insurance cost, here is a summary of some of the best architect insurance companies and how much they charge:
| Company | Cost per Month | Cost per Year | Best for |
| Coverwallet | $30 | $360 | Architect insurance quotes comparison online |
| Next | $38 | $456 | Fastest architect liability insurance policy |
| Hiscox | $48 | $576 | Home-based architects |
| Progressive | $59 | $708 | Best Overall & Established Architects |
| The Hartford | $60 | $720 | BOPs & Insurance for Larger Architectural Firms with Many Employees |
| AIG | $70 | $840 | International Architects |
Architect Professional Liability Insurance Cost
Architect professional liability insurance cost is slightly cheaper than architect general liability insurance. This is because the risks covered by this coverage type are common. The average architects PI insurance cost of insurance for architectural designers is $43 per month which comes to an average annual cost of $516 a year. It is important to note that different factors determine architect professional indemnity insurance cost. Some of them include;
Type of Project
Some projects cost more than others. For example, a project that involves the construction of a multistorey building is susceptible to lawsuits. Projects like skate park construction could result in more injuries.
Claims History
This refers to the history of the architectural firm in question and the claims related to the project. If the project's claim history is high, the insurance cost is higher.
