Errors and Omissions insurance for Professional and Corporation

[Mixtli]

Hi everyone,
Please consider the following scenario in Ontario:
Engineer A currently has his/her own company and carry E&O insurance.
The company Engineer A used to work for has its own E&O and Engineer A was covered under that.
Now that Engineer A has his/her own company, is he/she still personally covered by his/her former's E&O insurance for the designs he/she did in the past with them? or does he/she need to purchase additional personal insurance on top of the current company E&O, to cover for prior acts with others?

Maybe another way to put this scenario is: what happens in terms of E&O liability when an engineer changes company?

Thanks a lot in advance

M.

 

[IRstuff]

Depends on the insurance. There are insurance variants like tail coverage, prior acts, occurrence, etc. You need to find out what your prior company covers, and what your current insurance covers, from your carrier.

http://en.wikipedia.org/wiki/Professional_liability_insurance

TTFN
faq731-376

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[zdas04]

All of the products that IRstuff mentioned are fairly costly and you don't get them automatically, you have to explicitly have them underwritten before you terminate the relationship. If you didn't do that, then most likely no one did and you don't have insurance.

David Simpson, PE
MuleShoe Engineering

"Belief" is the acceptance of an hypotheses in the absence of data.
"Prejudice" is having an opinion not supported by the preponderance of the data.
"Knowledge" is only found through the accumulation and analysis of data.
The plural of anecdote is not "data"

 

[DRWeig]

Contact the E&O insurance company from Engineer A's former employer. They'll answer your question definitively. As a covered or formerly covered individual, you have a right to know all the terms of the coverage.

Best to you,

Goober Dave

Haven't see the forum policies? Do so now: Forum Policies

 

[SteelPE]

Agree with all of the above. I am currently in a similar situation except for the fact that the company I used to work for went out of business. I raised all of the questions at the start of my employment and was told by many people, including another engineer who was already working there, not to worry about it. Where did that leave me? The other engineer passed away (I guess he didn't have to worry about it) and shortly after the company went out of business due mismanagement, reformed under a different entity and threw me to the curb. I was left with picking up the insurance pieces amongst other things. One year later I am still fighting with them about the insurance mess they left behind (I guess you shouldn't try and take large yet to be sealed projects with you to a new company when you are throwing design engineer to the curb w/o insurance).

 

[Mixtli]

Hi,
I was told my an insurance broker that the E&O for the engineer is covered by the company that buys the insurance, since there is a clause on the wording stating that the insurance covers any work done by an employee, current or former, as long as the company keeps continuity on the insurance.
Now, SteelPE's case may be different since the company no longer carries E&O insurance; I don't know what the answer would be in that case.


Cheers!

 

[SteelPE]

My problem revolves around who is required to pick up the cost of a tail policy. Some contracts that were signed by my employer require engineering to carry E&O insurance for x amount of years after the project is complete. In my instance I was competing projects up to my last day of employment. When I spoke to the agent, they said that since I wasn't signing the contracts I was not required to maintain coverage. I wasn't going to take that chance and am basically using all of my leverage to force this issue with my former employer. Had they not taken projects with them I would not have any leverage. Had I quit and went to work for another company and they continue on w/o going out of business and maintained the policy I don't think it would have been an issue.

 

[Forensic74]

Typically, it's an owner suing the Inc. entity and not the engineer personally because the contract is between the owner and the Inc. Now, the question is, could your old employer turn around and sue you? I suppose that would be a question even with current employers.

 

[moltenmetal]

Need to talk to a lawyer about that, MainMan10, and it's going to vary by jurisdiction. I'm not a lawyer, but if I remember correctly, even if your former employer or former client of your former employer did sue you personally at some future time, they would have a harder test to satisfy than just "did you do the work and was it done wrong" for you to be separately civilly liable, even to a small percentage of the total.

That assumes that your work isn't incompetent enough to get your license taken away in a C&D case by PEO though- that is a totally different matter of "professional liability". Based on reading the Blue Pages in Engineering Dementia, that bar too is set pretty low and rarely touches anyone who isn't a structural engineer. That should change in my opinion or the license really is nothing more than a fee to put some letters behind your name, but I digress...

Some bodies sell secondary liability insurance to groups of individuals to cover situations like this, i.e. otherwise uninsured liability arising from past employment. Here in Ontario, that coverage costs something like less than $50/yr per person when applied over a large group of engineers, so obviously it's covering an event that rarely happens- here at least.