Professional Liability Insurance

[kwilson]

This is a question for the smaller companies out there where there is no contractual requirement for professional liability insurance. I have carried E+O for over 30 years I was wondering how many of you carry it Have you ever had a need to use it? Once you have filed a claim did your rates go up or were you unable to get insurance? Which clients have requested it? We are trying to assess our needs because the rates have skyrocketed.

[Dave Lindell]

The cities I work for require it, but are very understanding about raising rates to cover it.

[Jim Frame]

I also have contracts requiring E&O, but would be carrying it anyway in order to protect my assets. In the early stages of self-employment I "went bare," knowing that I was unlikely to get sued and would have plenty of time to recover if I did, but now that I'm near the end of my career I don't want to take the risk.

My policy isn't up for renewal until March, but I haven't yet seen a marked increase in the premium. This year it was less than 2% of gross receipts, so it would have to go up by a whole lot before I considered dropping it. What kind of increases are you seeing?

[wingding]

For this year I just paid 15k for 2 million per claim based on 75% surveying and 25% Civil plans Gross billing 1.5 million in year 2023.
I only have had it for 4 years since I've added civil. (water in the basement)

[kwilson]

The increase this year was 150% of last year. From 4.5 to 7k. Also we noticed there is a limit on attorneys fees at 30k. An attorney told me that would cover a settlement but if a case went to trial it would be far more.

The only client that requires it is a gas pipeline company. Otherwise none of our clients (mostly homeowners, architects and contractors) don’t ask for it. I have never needed to use it and have been in business for 37 years. Any damages we have caused we always worked it out. So it’s hard to say if it’s worth it. We don’t design anything so there isn’t much we do in a technical way that could case damages to life or limb. And it seems to me the big settlements happen when people get hurt. We have general liability insurance, workmen’s comp and auto insurance for situations that could injure someone.

So I am trying to figure out why we still need to be insured with E and O? Can anyone give me a good reason? I need convincing.

We are also a corporation with a fair amount of assets in the bank so we are not underfunding ourselves. The corporate veil should be free from being pierced.

Two serious events have occurred in our company. One was a 10k construction staking error. The other was a survey we initially set corners on, a house was built and then we found a 2 foot mistake and now the house is in the setback. I purchased the vacant lot next door, did a lot line adjustment and then built a house on the lot and sold it. I lost money because the market took a skid. That was on 1992 or so.

Our construction staking consists of an occasional new home, and quite a few adus and additions on well developed lots.

[Jim Frame]

We are also a corporation with a fair amount of assets in the bank so we are not underfunding ourselves. The corporate veil should be free from being pierced.

I've never looked into how these things play out in the real world, but I'm thinking that if a judgment is ever made based on professional negligence, it's against the licensee, not the corporation. So if the corporation doesn't have adequate assets to satisfy the judgment, the plaintiff can come after your personal assets without having to pierce the corporate veil.