Architects & Engineers (A&E) Professional Liability
Practice and Project Specific Policies – Insuring Businesses throughout New York
1. Faulty-Work Exclusion
- A&E Professional policies typically have a Faulty-Work Exclusion. That’s likely okay if the exclusion only applies to work that was performed by or on behalf of the firm. However, an absolute Faulty-Work Exclusion; one without any exception, must always be avoided.
2. Services outside of North American - In many foreign countries, an alien insurer cannot defend and pay claims. In order to protect your firm, it is essential for your A&E Professional Liability policy to expressly specify something along the lines that:
…where we (the insurance company) are unable to provide a defense or pay DAMAGES….because of a law, rule, regulation or other prohibition, that we (the insurance company) will advance to your firm, on a current basis, reasonable defense costs that your firm incurs; and, will indemnify you, the Insured, for Damages determined upon a final judgment or agreed settlement.
3. Product Design Exclusion - An A&E Professional Liability policy typically contains a Product Design Exclusion that specifies that coverage does not apply to Claims based upon or arising out of:
The design or manufacture of any goods or products which are sold or supplied by your or by others under license from you.
There is often an exception only for software development.
Should your firm be involved with the design of products, it is essential that an appropriate exception to the Exclusion be crafted.
4. Builder's-Risk Insurance - If your firm provides Professional Services at a project that is insured under a Builder’s Risk policy, you must ensure that the Builder’s Risk policy provides an unqualified Waiver of Subrogation in your favor. Many Builder’s Risk policies provide no waiver at all, or provide a limited waiver for claims relating to your On-Site Visits only. Without an unqualified Waiver, your A&E Professional Liability policy limits could be eroded or totally exhausted as a result of a subrogation action brought against you by a client’s Builder’s Risk insurer.
5. Severability - a big item.
This is our last item for now but maybe it should be the first. Why? There is Severability of the Application
- which protects Innocent Insureds in the event that information was misrepresented (intentionally or unintentionally) or concealed during the application process. There is also Severability of the Intentional Acts Exclusion(s) which protects Innocent Insureds in the event that another Insured committed an intentional, fraudulent or similar act. And; Severability for Breach of Policy Conditions - which provides protection in the event that an Insured breaches its Duties and Responsibilities under the policy. These provisions are essential. You need to contact us if your own, or your client’s policy is lacking.