Professional liability · For contractors and owners
The design was wrong. This is the policy that answers for it.
Professional liability, also called errors and omissions, covers claims that your design, advice or management cost a client money: the legal defense and the settlement, up to the policy’s limits.
Light RFP Risk Management Services LLC · NY DFS License # PC-1978982
What professional liability covers.
Typically covered
- Errors in design work, including design-build and delegated design
- Construction management and owner’s-rep advice
- Specs, value engineering or code calls that turn out to be wrong
- Legal defense for a covered claim: on many policies it comes out of the same limit that pays the settlement
- Claims made and reported while the policy is in force, for work done since its retroactive date
Where another policy answers
- Injury or property damage from the work itself: General liability
- Physical damage to the project while it’s built: Builder’s risk
- A data breach: Cyber
- A fraudulent wire: Cyber, if funds-transfer fraud is added
- A contractor who can’t finish the job: Surety bonds, a performance bond, which protects the owner
Usually not covered
- Cost estimates that run over
- Guarantees you give in a contract
- Work before the retroactive date
Who on the block needs it.
Design-build and specialty contractors
If you design, engineer or detail any part of the work, your GL policy usually excludes those mistakes. This is the policy that answers for them. If you only build to someone else’s drawings, you may not need it.
Owners and developers
Owners usually require it from their architects, engineers and design-build contractors rather than buy it themselves. A developer who manages projects for others may need its own.
Property managers
Manage buildings for other owners? A client can claim your management cost them money: an insurance renewal that lapsed, a vendor hired without checking their insurance, a lease or budget handled wrong. General liability usually doesn’t cover that; professional liability is written for it, and many management agreements require it.
How the RFP asks for it
Design-build and CM RFPs often ask for professional liability (for example $1M per claim and aggregate), written on a claims-made basis and kept in force for a set number of years after the job is finished.
- Claims-made
- The policy in force when the claim is made pays, not the one in force when the work was done.
- Kept in force
- Renewed without a gap, with the same retroactive date, for the years the contract names. If you stop or switch, an extended reporting period (a ‘tail’) lets claims made later, for work done before, still be reported.
How we quote it.
Light RFP’s brokerage quotes professional liability alongside the rest of your program: you fill in the application, and our team takes it to market.
Tell us about the business
The services you provide and the revenue each brings in, your client contracts, and your claims history.
We take it to market
A Light RFP broker reads your application, contacts you about anything missing, and takes it to the insurers that write professional liability for businesses like yours.
Compare the quotes
Limits, deductibles and exclusions side by side, matched to what your contracts, RFPs and lender require. Applying commits you to nothing; you choose whether to buy.
We place it
Our brokerage puts the policy you choose in force and issues the certificates your projects and lenders ask for.
Our application
5 sheets. Plan on 15 to 25 minutes for a design-build contractor or a property manager with no claims, with a typical contract to hand.
- A design-build contractor
- about 62 answers, 57 required
- A manager for other owners
- about 60 answers, 54 required
Follow-up questions appear only when an answer calls for them.
What it asks
Open a sheet for a few of its questions.
PL-01Business
- What was your revenue last year, and what do you expect over the next 12 months?
- How many licensed architects or engineers are on your staff?
PL-02Your services
- Which services do you provide, and what share of your revenue does each bring in?
- Do you hire other firms to do professional work for your clients?
PL-03Contracts and quality control
- Do you use a written contract with every client, and does it limit what you owe?
- Does a second person check drawings, specs or budgets before they go to a client?
PL-04Coverage
- Which limit do you want for each claim, and for the year?
- Do any contracts require you to keep the policy for years after the work is finished?
PL-05Insurance and claims
- Do you have professional liability today, and what is its retroactive date?
- Has anyone made a claim over your professional work in the last five years?
Have these ready
- Your business basicsLegal name, FEIN, the year you started, and revenue for the last year and the next 12 months.
- Your services, by revenueEach kind of professional work you do, such as design, construction management or property management, and the share of revenue it brings in.
- A typical client contractWhose form it is, whether it limits what you owe, and what it asks you to indemnify.
- Your current policyThe declarations page: limits, deductible, premium, expiry date and the retroactive date.
- What your contracts ask forThe professional liability limit, and how many years after a job they ask you to keep the policy.
- Loss runs, if you have themFive years of claims history from your current insurer. You can send them after by replying to your confirmation email.
Professional liability questions.
Doesn’t my general liability cover this?
Usually not. Most GL policies exclude professional services. GL answers for injury and property damage; professional liability answers for a financial loss your design or advice caused.
What does claims-made mean?
The policy that pays is the one in force when the claim is made, not when the work was done. Renew without a gap and keep the same retroactive date, or older work can fall out of cover. Switching insurers? Keep the same retroactive date. Closing or retiring? Buy a tail, an extended reporting period for claims that come later.
Do I need it if I only build to someone else’s drawings?
Often not, if the contract gives you no design or management duties. Read it closely: shop drawings, delegated design and value engineering can bring design liability with them.
What affects the price?
The services you provide and the projects you take on, your revenue, the limit and deductible you choose and your claims history.
Get a professional liability quote.
Getting a quote is free. Light RFP earns a commission from the carrier on all policies.
Light RFP Risk Management Services LLC · NY DFS License # PC-1978982