Professional Liability Insurance

Do Architects Need to Purchase It?

by Ryan Markham, Cotney Attorneys & Consultants

(Editor’s Note:  Ryan Markham is an attorney at Cotney Attorneys and Consultants, focusing his practice in the area of construction law.  Markham has extensive experience in delay claims, mechanic’s and materialman’s liens, bond claims, defects, bid protests, contract review, contract negotiations, and OSHA defense.  For more information, go to www.cotneycl.com.)

In addition to providing creative and functional designs for construction projects, architects are responsible for a myriad of other project details.  They must understand zoning, assist with permits, select materials, and take part in inspections.  They may also provide observation services, ensuring that the builders adhere to the design and accurately interpret the project drawings.  But, what if something goes wrong?  Can architects be liable for damages? 

         These questions often lead to architects deciding to purchase professional liability insurance.  This error and omission insurance can protect the architectural firm and its employees against claims of errors, omissions, and negligence related to architectural services.  It also provides a host of benefits for architects, including coverage for defense costs, personal injury, and issues with past-rendered services.  It is not the same as commercial general liability insurance, held by many different businesses, which can protect against property damage and accidents.

         Some might be surprised to learn that architects can be liable for a contractors’ negligence and can be subject to claims resulting from inaccurate cost estimates, faulty feasibility studies, or construction delays.  Many assume that only contractors are responsible for these issues, but that is not the case.  These kinds of claims can occur on any project, and architects are at risk as well.  There have even been cases in which architects have filed suit to recover unpaid fees, only to be hit with counterclaims for negligently rendered services. 

         When architects are working with clients who have limited construction experience, they must clearly explain the design and construction process to the client.  This will help stave off professional liability claims, which can result from a failure to manage client expectations, rather than a specific construction failure. 

         The responsibilities imposed on architects to inspect or observe construction progress may be called out in the contract.  However, they may also arise from general custom and practice in a given jurisdiction.  Courts have consistently recognized owners’ rights to sue architects when they fail to observe the construction adequately, do not conduct enough inspections, or authorize payment for substandard or incomplete work.  Recently, there has been an uptick in claims against architects, but some firms are hesitant to invest in professional liability insurance.  In particular, small firms may think that their risk is low since they have limited assets.  In many instances, however, the benefits can outweigh the costs. 

         One critical benefit of professional liability insurance is the coverage of legal fees to defend against claims.  The insurer can provide the architectural firm with a lawyer to help defend the claim and engage experts to help show that the architect provided services that met the industry standard of care.  This legal support is especially invaluable if the claim goes to trial.  Professional liability insurance can also offer continuing risk management services to the insured.  These services include contract review and advice for avoiding or reducing unnecessary liability.

         Architects are exposed to liability because of their complex and board scope of duties and responsibilities.  By having professional liability insurance, they can enjoy greater peace of mind knowing that they have the resources to manage multiple risks.

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