Short-Term Moonlighting Question 1

[sgs114]

Hello,

I have recently decided to perform some structural engineering services moonlighting from my main work. I don't foresee continuing this for more than a year, so my main question is about liability insurance. I have looked into E&O insurance through ASCE and have a quote for a one year term. However, since I don't plan on continuing past this year, I would likely let my policy lapse. Which means if anything comes up in 2021 or beyond, I wouldn't be covered. I am just a little concerned that if anything comes up from the owner in 2021, I wouldn't be covered and be on my own. Is there a way to address this?

Is it worth setting up an LLC and then absolving it at the end of the year? Would that keep me personally separate from any claims? My best bet may be to talk to a lawyer I think. Just thought I would look for some input here.

Thanks,

SGS

 

[IRstuff]

The reason E&O insurance is applied to the individual is because the liability is at the individual; LLCs don't do anything to shield doctors for malpractice. What you might explore is tail coverage, which covers past efforts.

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[JAE]

Does your primary company know that you are moonlighting?
If one of your personal projects goes bad, it is possible that the suing entity could end up suing your own firm, and bypass you.
This has occurred before in past cases - you are an engineer, working for a firm, you in a sense are representing your primary firm despite your LLC, independent contract, etc. - and the lawyers always follow the deeper pockets.

In cases like this, your own firm could then turn and sue you as well.

All this is the main reason companies don't like, and many times prohibit, moonlighting.

 

[msquared48]

Due to the liability continuing for 6 to 7 years after you “retire”, consider continuing the insurance for a similar amount of time after you retire. Or, be REAL conservative with your projects...

Mike McCann, PE, SE (WA, HI)

 

[Ron]

Ditto on JAE's comments.

Also, I believe you are in Oregon. Their statute of repose is 10 years for design professionals. That means you could incur liability for 10 years past your services ending.

It is difficult to shield a single entity from liability with any corporate structure. Check with a lawyer who does professional liability defense.

 

[XR250]

You can buy a "tail policy" from the insurer to cover future issues. The LLC will not help from a liability perspective if you are the sole employee. I took a risk and went un-insured for 15 years.

 

[WARose]

Is it worth setting up an LLC and then absolving it at the end of the year? Would that keep me personally separate from any claims?

Your best bet is a LLC. One thing to be sure is done is have a indemnification clause in the articles of organization to indemnify you (personally) for any acts for this organization.

You should not be personally liable from acts taken as a agent of a Inc/LLC. If your pockets are deep enough, that however may not stop a personal injury lawyer from trying.

Be sure you use a COA stamp for your LLC on drawings. (If applicable, in the state you are in.)

You may want to read through this thread.....some good info (I got) via a lawyer:

https://www.eng-tips.com/viewthread.cfm?qid=426589