Switching Professial Liability Insurers 1

[glass99]

I am shopping around our PL insurance right now and my old broker tells me there are some disadvantages to switching carriers from year to year. My insurance is regrettably quite expensive this year and I have a quote from another for about 10% cheaper than the quote from my old broker I have been using for ~10 yrs. Does it make sense to take the cheaper quote? I find it hard to do a side by side analysis of the policies other than the basic insured amounts which are equal.

 

[Pmtottawa]

Only question I would have is if you get a claim under the old policy... would the old insurer still cover you.

 

[glass99]

we would be covered no matter what but I think the problem with switching insurers is they get into an argument between themselves about who exactly is liable which can leave their clients in the lurch a bit.

 

[SWComposites]

also, watch out for how much they plan to increase your rates in the follow on years; they may be low balling this first year coverage.

 

[LOTE]

Typically, PL policies are "claims made" policy, which means it only matters who the current insurer is the day the claim is made (versus when you were involved on the project).

 

[NorthCivil]

agree with SW composite. they (the broker) may be offering a nice introductory rate to get you on board, followed by increases to follow. My power , internet, phone providers all do the same.

i wouldn't bother switching for %10. what will it amount to, a few thousand?

the details of the policy are important as well, one policy is rarely identical to the next. At least in my market, all these insurers and brokers are re-insured by a variety of the big outfits that all swap policies to eachother. in the end, what you pay is generally more or less what you get.[pre][/pre]

 

[glass99]

they may be low balling this first year coverage.

As an addendum: I just got a MUCH lower price (about 40% less) from a new carrier who my broker was only prompted to look at because I was shopping them around. One of the brokers I spoke to did say the same thing about low balling (or "buying business" as he said). But for that amount of savings maybe I don't mind being bought.

 

[phamENG]

glass99 - I'm sure you're savvy enough to know this, but I'll say it anyway for posterity's sake: be cautious of big savings at the expense of no prior acts coverage. I had a big hike last year, and shopped around a little...I found some big savings like your 40%, but No Prior Acts was always hidden in the fine print. I wasn't interested in suddenly being uninsured for everything I'd worked on previously, so I stuck with my current insurer. Not only that, but I have a few contracts that required me to maintain insurance for a set period of time. Switching to one of those plans would have put me in breach of contract. Since my insurer sends an updated COI to all listed clients annually, they would have known as soon as my coverage was canceled.

 

[glass99]

@phamENG, yes continuous coverage is of course non-negotiable. Good to know they tried to slide that by you! I will check to make sure they are not doing the same to me.

 

[XR250]

Not only that, but I have a few contracts that required me to maintain insurance for a set period of time.

I never sign contracts like that as I have no control if I can maintain coverage.

 

[phamENG]

I never sign contracts like that as I have no control if I can maintain coverage.

I generally try to avoid them now, but I was hungry for work when I first started out and the chance at getting a bunch of municipal work was enticing. I got some, but not a lot. As much as I don't like insurance, I plan to keep it. So, if there's a time when I don't have insurance, it probably means the ship is sinking or has already sunk, so I'm not too worried. I won't sign anything agreeing to be insured in perpetuity (though I haven't had anyone ask).

 

[IceNine]

Agree with pham. For the type of work I do and enjoy, I have very little leverage on the contract terms, especially for public work.
If I can't get coverage, the ship has sunk.

 

[glass99]

You can negotiate to an extent with clients about insurance requirements about things like umbrella and CGL coverage, but my experience is that the PL limits are set by their legal "experts" who have uniform requirements for everyone ever regardless of the circumstances. This can be problematic for us since we do a lot of relatively small feature elements of larger projects, but we have the same insurance requirements as firms with fees 10x more than us

I had a significant disagreement with a client in 2019 when they told me half way through a project that I needed $5mm of coverage when I only had $2mm and told them so in my proposal. It was a giant project with a giant bureaucracy, and they basically said they had no flexibility on either my fee or the insurance requirements. It was the closest I came to ever calling a lawyer on a client, especially since they also didn't want to pay my hourly billing portion. They eventually put enough pressure on their money folks that they would reimburse for an additional $1mm SJX for three years, and the architect kicked in a few thousand for my hourly billing. The whole thing was very unpleasant and damaged relationships. We now carry $5mm for the whole practice because last year we had a client that demanded it and was willing to reimburse 3 years of premiums.