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Insurance Coverage Recomendations

  • 1.  Insurance Coverage Recomendations

    Posted 03-19-2019 11:56
    I would love advice on what insurance coverage my small four-person office should carry. We have a professional liability insurance policy for $1M, workers comp and disability and a small policy covering the office content. Our largest project has a construction budget of $5,000,000 but we are submitting proposals for two larger jobs $7M-$10M.

    One of the RFPs requires the following insurances:

    Commercial General Liability (including Premises-Operations; Independent Contractors' Protective, Products and Competed Operations; Broad Form Property Damage):
    1. Bodily Injury
      $1,000,000 Each Occurrence
      $2,000,000 Per location/Per Site General Aggregate

    2. Property Damage
      Included Each Occurrence
      Included Aggregate

    3. Products and Complete Operations shall be maintained for six (6) years after final payment

    4. Property Damage Liability Insurance shall provide explosion, collapse and underground coverage as applicable

    5. Contractual Liability (Hold Harmless Coverage):
      Bodily Injury: $1,000,000 Each Occurrence
      Property Damage:
      Included Each Occurrence
      Included Aggregate

    6. Personal Insurance with Employment exclusion deleted: $2,000,000 Aggregate
    7. If the General Liability policy includes a General Aggregate, such Aggregate shall not be less than $2,000,000. Policy shall be endorsed to have General Aggregate apply to this Project only.
    Umbrella Excess Liability
    $10,000,000 Over primary insurance
    $10,000 Retention

    Many thanks,

    Esther Sperber AIA
    Studio ST Architects
    New York NY
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  • 2.  RE: Insurance Coverage Recomendations

    Posted 03-20-2019 17:39
    I suggest you be sure your General Liability includes electronic documents coverage (that might not be the exact name, but it's coverage for file restoration in the case of ransomware*, trojans, etc.) as well as basic coverage for restoration of paper documents.

    It looks like there are several parts of your General Liability that cover you for things that often aren't an issue for design professionals - "product" coverage, etc.  May not cost a lot in the big scheme of things, but you might as well be paying for the kinds of things we usually need (on the Professional Liability side).

    This could be a good time to talk with your broker about the kind of coverages they suggest.

    *My carrier wouldn't pay the ransom, but paid (less deductible) for some clever folks to unlock a lot of files, once upon a time; the deductible was peanuts.

    Joel Niemi AIA
    Joel Niemi Architect
    Snohomish, WA

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  • 3.  RE: Insurance Coverage Recomendations

    Posted 03-20-2019 17:40
    Hi Esther, 
    With a brief look at what you posted, I believe you have a great GLI policy.  I believe it depends what type of RFP / RFQ you are going for.  We do quite a bit of State government work and in Hawaii, their base requirement  is $2M / $2M.  The requested General Liability looks huge...and I'm not sure why.  It appears to look like a Design-Build RFP?  Usually Architectural offices do not need anything this substantial unless they have over 100 employess/own their own multi-story building/etc.  The $10M umbrella over the GLI is huge!  If your small firm will be a part of a Design Build team, where the General Contractor is a part of your team, they would have this amount most likely. 

    Reid T. Mizue, AIA
    OMIZU architecture inc
    1023 Pensacola Street Unit H
    Honolulu, HI 96814

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  • 4.  RE: Insurance Coverage Recomendations

    Posted 03-20-2019 17:42
    I also have a small firm (3 people) and my General Liability policy pretty much already has the provisions you listed.  You have more Professional Liability coverage than I have carried for 31 years.  I have no idea what that Umbrella Excess Liability is but it sounds a bit ominous... and if it is just for that project, I would see about getting it on a per-contract basis only and make sure it doesn't negate any provisions of your architectural agreement.  Not sure if that is helpful.


    Gina Moffitt AIA
    Kiyohara Moffitt
    Los Angeles CA

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  • 5.  RE: Insurance Coverage Recomendations

    Posted 03-20-2019 17:45
    I would recommending showing prospective insurers the specifics you posted on the AIA site and see what the insurers recommend and what the associated costs for your firm are.

    Daniel Alter, AIA

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  • 6.  RE: Insurance Coverage Recomendations

    Posted 03-20-2019 18:00



    Sounds great that you are getting into larger work. I would caution that any additional insurance you take on for a specific client be reflected in your fee structure. It is also possible to take on a specific project based insurance for that particular client/project. You need to speak with your carrier and see what's available. If you choose to carry it for the whole firm going forward as a cost of doing business, then consider that in the evaluation of your multiplier on your firmwide billable rates. If you are only a few people strong, then I would opt for the project policy or have the conversation with the writer of the RFP to determine if that additional insurance is negotiable somehow or if not, would they consider splitting the cost of the coverage.


    I always opted for having the "insurance coverage cost" in some kind of proportion to the "fees paid". Why pay for a six-year exposure to multimillion-dollar lawsuits for a fee that doesn't reflect the risk? The bottom line is that it's your carrier's exposure to the risk and they need to be on board with that risk. Make a call, and best of luck as you grow!


    Mark Forth, AIA, NCARB


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  • 7.  RE: Insurance Coverage Recomendations

    Posted 05-05-2019 14:37
    I might be a little late to this game, however, we are about the same as you - 4 people, with $1M coverage for E&O.

    I don't think my insurance co will go higher than us, until our billables get larger. We started at $500K, and were able to graduate to $1M after a couple of years.

    When we go after projects that "require" larger insurance amounts, I will provide my current insurance cert and state "here's our current insurance cert, and we can negotiate higher insurance levels if required."​. I haven't had any issues. Honestly, some of these project are silly - if they need $5M or $10M of insurance, that's only the largest firms who can even qualify for limits that high, so...what do they really want? In my area, a lot of the communities are asking for something like $3M OR 10% of the project value, whichever is lower. The 10% often comes out lower than $1M, so I still qualify.

    David Sisson AIA
    David Sisson
    Providence RI

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