Small firm prof. liab. ins. and overhead 7

[AZPE]

First the info,

Small structural engineering firm, mostly residential and some small commercial work, with less than $200,000 in gross revenue per year.

With that said, from your experience what would be the expected premium for a Professional Liability Insurance policy?

Second question, what companies do you use and are happy with. I would love a few names/contact info.

Thanks for your help. I am just finding it necessary to go out on my own and need a better understanding of the associated costs.

Thanks.

 

[jwilson33]

AZPE-

I am in a similar business situation to the one you posted. I have 1mil with CNA/Schinnerer and pay about $9k per year. That is based on an estimated revenue of about $115k. The benefit of this plan is that I can lock into a 3-year fixed price at each renewal. Since my business is growing, my insurance fee stays fixed based on revenues the year prior to my last renewal.

My agent did price 3-4 different carriers. This one was the most expensive by 10%-20%. But with the 3-year lock, it ends up being comparable in year 2 and 3. My next renewal in 2009 is going to be brutal. Also, it seems better to find a carrier and stick with them.

 

[hfyavuz]

An expense that is escaping comment;Even if you have started your small business with sufficient money, you have to wait for the customers orders, and the payment (most probably the payment is few months later than the billing date). This means when you start your business, for example first of january, the time between -you have found the custtomer, you have manufactured or prepaired the goods/service, you have delivered them, and you got the payment (depending on your job but there is a time almost few months between the billing date and the date you got the payment). Finally it's first of july, you have earned the money. You need enough capital to survive for 6 months.
And a question for RHB51, for marketing your service, what was your strategy in the beginnig? It plays a vital role for the business and we engineers usually not good at this subject.

 

[RHB51]

Dear hfyavuz;

I was fortunate that I knew 2 contractors that would need my services. I made 2 phone calls and picked up 3 projects.
They had known me previously. I have a specialty structural firm that specializes in concrete hi-rise formwork, shoring and reshoring. Very few engineers do what I do as an independent engineer so the demand is great.

When I started getting more clients (which were all word-of-mouth) I always did the very best I could.

I wish I had a magic potion for you but I never had to market myself.

There is one thing I would say to new clients though and they would drop out of the chairs when I said it;
"If you are not happy with my work do not pay me".
I was never taken up on the offer.

They had never had anyone stand behind their work 100%.
They did not know me other than by recommendations and everyone of them used my services many times.

RHB51

 

[tuggertoo]

My firm does civil, mechanical and electrical design working mostly with architects and land developers. Our E & O policy runs us about $16,855.00/year-includes previous project coverage our old company projects (my mechanical/civil company merged with an electrical firm). Our policy is with Traveler's. Two years ago, our merger took place in Oct. 2002, we were with DPIC with an annual premium of $33,000.00.

 

[Ashereng]

For Oil and Gas, in Canada, it starts at about $15,000 per year for a typical Professional Liability Insurance (or sometimes also called Errors and Omissions liability). This is NOT "General Liability" - which goes for about $250 per year.

I am not sure what the value of coverage is - I think it was around $20 Million (but this is from memory). I decided that I didn't need it at that price.

"Do not worry about your problems with mathematics, I assure you mine are far greater."
Albert Einstein
Have you read FAQ731-376 to make the best use of Eng-Tips Forums?

 

[Ashereng]

Oh, the Professional Liability Insurance was from Aon.

The general liability was from State Farm.

"Do not worry about your problems with mathematics, I assure you mine are far greater."
Albert Einstein
Have you read FAQ731-376 to make the best use of Eng-Tips Forums?

 

[AZPE]

I forgot to post after I figured out what to do. I did end up going with XL, thank you again for the referal. The policy, with a $0 deductible was $4,349/yr and if I take their liability education course, they will refund me $435 (10%). Also, at the end of 1 year, if I incorporate a Limitation of Liability clause into contracts, they would reissue the policy with an additional 15% reduction in premium. I will have to look a little more into the LOL clause and what that implies to me and to my clients, but that is just more money saved, and the rate seems very reasonable.

Again, thank you to all of you for your help.

 

[PEinc]

What is you coverage limit? Don't forget that your premium will rise each year as your billings rise, even without any claims.

 

[AZPE]

$1,000,000/$1,000,000 and yes, I know that as billings rise, so will the premium, insurance wouldn't be called a racket if it didn't!