Generally requested professional liability limits from clients?

[beej67]

I've been operating off of a $1 million professional liability (errors/omissions) policy for a very long time now and typically had no problems. Of late, one of my better clients is requesting $2 million on E&O. I'm not sure why, but they're a larger client so it's difficult for me to speak with those in the "adminosphere" making the decisions on that. Have any of you encountered something similar? Industry trend, or just a peculiarity with this particular client?

Hydrology, Drainage Analysis, Flood Studies, and Complex Stormwater Litigation for Atlanta and the South East -

http://www.campbellcivil.com

 

[SteelPE]

I'm a sole proprietor and I have been carrying $2M since inception. It's a policy left over from my previous mentor who set everything up. In talking to the insurance companies about reducing coverage the savings was very minimal so never made the switch to $1M. I'm sure you will find the increase from $1M to $2M isn't that much.

 

[beej67]

For general or E&O? I jumped to $2m on general a while ago, but the quotes I've gotten on E&O are a lot more.

Hydrology, Drainage Analysis, Flood Studies, and Complex Stormwater Litigation for Atlanta and the South East -

http://www.campbellcivil.com

 

[SteelPE]

Yes, this is for an EO policy. I don't know what you mean by a lot more. My general is about 10% of my EO insurance. The cost savings from $2M to $1M was less than 10% for me on the EO policy. Have you priced out the increase with your carrier?

 

[beej67]

I did get it priced, and it was almost double what I'm paying now.

Curious.

Hydrology, Drainage Analysis, Flood Studies, and Complex Stormwater Litigation for Atlanta and the South East -

http://www.campbellcivil.com

 

[SteelPE]

Well, I just went back and looked at the last time I priced the difference and going from $1M to $2M was about a 60% increase. This was for 2016. I didn't price it out again this year. Double seems a bit out of line.

My original carrier wanted over $17k for a policy that never had a claim against it. I made the switch and the cost was so low paying the extra 60% didn't bother me.

In any event, this policy has been ongoing for over 10 years with the same limits. I haven't been asked to increase the premiums. I know a few engineers who I talk to who went from $1M to $500k as they are nearing retirement and winding down their client list.

 

[swertel]

E&O is still expensive and I'm at $1M. My latest potential client put this into their contract language:

General Liability: $1M
Biz Auto: $1M
Excess Liability (per occurrence): $5M
Workers Comp: $1M (or by law)
E&O: $1M

The most expensive quotes I got for those coverages was E&O and the excess liability. Of course, I put the burden back onto that client in the form of a retainer (so I could pre-pay the insurance) and still don't have any work from them.

--Scott
www.aerornd.com

 

[XR250]

My provider won't go over 1M on my policy. Did you also get the language to put them on the policy "as an additional insured"? I get that request occasionally which is typical boilerplate and is total BS. If they end up suing you, they are suing themselves as my agent tells me. I don't take jobs where there a are unreasonable insurance or liability requests.

 

[SteelPE]

I have been requested for the additional insured and reject the request every time. I have always looked at the additional insured as being free to practice engineering under my policy. When I explain this to my clients they quickly backtrack and just request the certificate.

Swertel, what happens to the retainer when they don't give you any work? Couldn't you still be on the losing end of that deal?

 

[XR250]

I have always looked at the additional insured as being free to practice engineering under my policy. When I explain this to my clients they quickly backtrack and just request the certificate.

I have tried that and they usually say it is required by THEIR insurance company or lawyers. That is when I say goodbye.

 

[swertel]

@SteelPE, yes I could still be on the loosing side of that deal. In this particular instance, I discussed a minimum contract value before I'd proceed and even told my point of contact that I won't be purchasing insurance until the contract is in hand and actuated by both parties. The retainer is the upfront fee to cover my cost of insurance, with balance due based on regular invoice.

In terms of being requested to be added as an additional insured, my insurance company gave me a (pdf) flyer to provide them that explains why it is so bad, for them as well as me.

--Scott
www.aerornd.com

 

[Terratek]

$2/4MM is not uncommon nowadays. For an additional fee, we are able able to get a rider for individual projects that require higher coverage than what we have on our normal policy. Once you get so many jobs requiring riders, it becomes more cost effective to just increase the normal coverage.

Those of you turning down work because the client wants to be added as additional insurd's are dropping good money for reasons that don't provide you more protection (well, you ARE more protected from jobs yo don't do than from jobs you do do...). Adding additional insured's does not change the nature of your coverage or of the additionally insured, according to our insurance agent. After all, if there was some change/increase to the coverage/liability, don't you think your insurance company would want money for it? But they don't. They'll give you certs with additional insurd's all day everyday for free. There is really no purpose to the added party in being added. It just makes them feel warm and fuzzy. We are hyper sensitive about liability (have legal council on indefinite retainer) and we do this all the time.