Professional Liability Insurance 5

[3of12]

I am a licensed PE and at a point in my career where I can afford to be a private consultant. Regarding professional liability insurance, I would like to benefit from the experience of some of my colleagues out there....How much coverage does a geotechnical engineer need? Any thoughts??
Thank you

 

[oldestguy]

I did just that and suggest some research of companies and their exclusions, etc.

My expeience with one very big case was quite good with a very generous company. Can they generally explain their past practices on actual claims? They probably want some guarantee that you use a certain form of contract on every job.

If you have a claim will they drop you? If so, you will have tough time getting any other company to cover you, becaues you will have to state the dropped situation in the application.

I'd add one other thing. If married and in a state with marital property laws, see sbout diverting yourself and wife from that requirement and also then gift all your assets to wife, except for retirement funds (assuming that can't be attached).

Then, each job has to have that client know of your marriage arrangement and a contract that states such wife assets are immune from claims. I add a "terms and conditions" on the back of every invoice also to help cover this, just in case.

Tbis "may" help in case of no insurance, but who can predict what lawyers can accomplish.

 

[TDAA]

Try contacting ASFE. They have quite a bit of knowledge when it comes to reducing liability. They will also provide insurance if you desire.

 

[oldestguy]

In answer as to how much coverge, it depends on what you may feel the claims may amount to. Also, what sort of deductable you are comfortable with. It is sort of a balance between what you can afford and what the consequences of under coverage may be.

Off hand I would think 500k to 1 Million would be the range for a person doing say 200 to 300 jobs a year varying from site investigation reports to construction inspection to solving problems brought to your attention for your advice.

If you are into jobs with considerable risk as to the outcome coming as planned, then I'd be on the high side. Consider the problems that are not under your control, such as weather, tight-wad clients not paying for construction control, etc. Any work for attorneys or site developers is likely to be in such a situation. Of course some engineers refuse to work for this type, due to their general bad client relations habits.

 

[IFRs]

I am a small shop and maintain enough insurance to pay for the lawyer that I would need to convince the plaintif that my company does not have deep pockets, my house and my family assets are protected and they should go elsewhere for big buck settlements. My business has few assets and my only real exposure would be legal fees. I still carry $500k I think and include that information in my proposals with the option for any customer to pay for an individual job rider for extended limits.

 

[Ron]

Prof. Liab. insurance for Geotechs is not always cheap. It is an area that the companies like to put in exclusions and caveats for your coverage, so be careful.

I carry a $1M policy with a $1M aggregate. The cost of the insurance is usually based on your GROSS fee level (if you subcontract a lot of work, you get zapped for the extra fees), so be sure you build that cost in.

I carry insurance primarily because many of my clients require it. I use my own contract for most work and my general conditions clearly cover my liability.

 

[BigH]

One other thing I might suggest - you have indicated that you are at that point in your career where you can afford to be a private consultant. This suggests that you might be at or near retirement - perhaps wishing to do private consulting practice "in retirement". In this case I would strongly suggest that you pick and choose your jobs carefully. Turn down those jobs that have a high risk potential for the fees (say, housing in marginal land - or environmentally oriented projects). Try to line up solid large primary industries (petroleum, mining, etc.) where you are dealing within their own properties only (no outside parties involved) or acting with/for other consultants (large multidisciplinary). They might even be willing to indemnify you or include you in their policies (although a lawyer should be involved to ensure that this protects you.

 

[oldestguy]

I'm not so sure about BigH's ideas of working for a big company, since my experience is that their lawyers seem to want to put all the liability on the back of the consultant with "hold harmless" clauses in the purchase orders, etc. When I see that, I cross it out of the contract and my terms and conditions says no such clause is part of the contract.

In such a case, I've lost a job ar two doing that, but who needs more liability?

Hey, being a consultant is not always such a nice place to be. However, the rewards can far exceed those of being an employee.

 

[BigH]

oldestguy - it might be what type of big company - and, of course, on the relationahip between you and the type of service you are providing.

 

[3of12]

A huge THANK YOU to all the respondents out there who took the time to answer my thread. Every thread interested me.Great advice and I greatly appreciate it. I plan to take only 10 to 20 projects a year as an engineer in private practice.
Interesting to note that I was recently contacted to look at a subdivision near a lake that is underlain with a great deal of peat...perhaps I will pass on that one. 3of12

 

[oldestguy]

One more idea.

If you have some expertese in fields that ocasionally result in disputes, being an expert witness is fun. However, too many such jobs in a short time can give you a "hired gun" reputation. I can't recall the place, but attorneys sometimes refer to lists of experts in certain fields for consultants. They seem to like to get them from "out of town" to avoid local political problems.

Gas explosions in the winter make for interesting work.

Nice to sit on such cases when they are not involving your own work, HA. No insurance needed then.

 

[fattdad]

My former boss (who happened to do well as the CEO of a quite large geotechnical engineering firm) is now working as a one-man consultant. In his case, he carries no (zero) professional liability insurance. His business has no assets, he picks his jobs carefully and if a client requires professional liability insurance, he just declines the work. I've heard more than one lawyer claim that the best defense is poverty - and I belive it. For my former boss' case, he has general liabilty insurance (which is cheap) but nothing more. If you pick your clients carefully and stay within your practice, I'd not worry too much - as long as you are just working on your own.

Just one man's opinion. . . .

f-d

¡papá gordo ain’t no madre flaca!