What's my liability? 1

[Engr1888]

Hi my fellow engineers,

I have a question about professional liability and would like to seek your valuable opinions.

I am a PE and have been working for a small engineering services firm for a long time. The owner of the firm has been sealing/stamping design drawings for every project and I have never done it. However, technically I have been taking care of the daily operations for the owner. Now here is my question. The owner may close his firm and business for good. If this happens, I assume the professional liability coverage will be terminated as well. After the firm is closed and the owner doesn't exist (say passing away), what's my liability for those projects I have worked on even though the drawings didn't have my PE seals?

Thanks

 

[Ron]

Keep in mind that anyone can sue anyone for anything!

You are likely OK since you did not have engineering responsibility for the projects. Also, the target of opposing attorneys is insurance coverage, not engineers. The PE who signed/sealed stuff has exposure, but his liability policy will likely cover his liability. In general, if the firm carries professional liability insurance, it is presumed to cover all professional employees and those who assist them....after all, the premiums are based on gross revenue and it is the whole team that produces that revenue, so they would have a hard time convincing a judge that coverage for various employees did not exist. Essentially, the firm indemnifies its employees for negligence.

Given all that, the "horse is out of the barn". If you have liability (not likely), there is nothing you can do at this point other than strip yourself of assets. You cannot get retro-active professional liability insurance if you've never been directly covered by a policy before.

 

[Engr1888]

Thanks Ron for your reply.

My concern for potential liabilities is after the firm is closed for business, when the firm and the owner are not available.

 

[nickelkid]

Like Ron said, you can be sued for anything...

Unless you, as an individual, have been grossly negligent and have significant wealth, I would not worry about it.

I sounds like your name is not on any contracts or as the Responsible Engineer.

 

[SteelPE]

Why are you closing? Is the owner retiring or is business bad?

Usually when you stop payment on your insurance your coverage ends. I have found the proper way to remain protected is to pick up a tail policy on your insurance, which isn't cheap (I went trough this a few years ago with a former employer who went out of business for financial reasons)

Now I gues the question is, if you boss is retiring, why are you not taking the business over? Where will your current clients go?

 

[oldestguy]

How's come there was no established formal method for transfer of ownership? It may not be too late to do that.

 

[HamburgerHelper]

Doesn't tail coverage sort of deal with this?

 

[nickelkid]

Tail Coverage is additional cost and is often not purchased.

 

[SteelPE]

Tail coverage is not purchased? Why would tail coverage not be purchased. Depending on the situation, I would think a tail policy would in order. It is ridiculously expensive though.

 

[Ron]

I'm fairly sure that a tail policy has to be purchased by the original holder of the insurance. As an employee, you could not purchase a tail policy to protect yourself.

 

[nickelkid]

Ron, you are correct, nor should you be expected to, but I imagine with persistence and the right price you could get insurance for just about anything.

 

[Engr1888]

Thanks to everyone for your reply.

Regarding tail coverage, if the owner closes the company it's likely he will stop having any coverage. He is very old and way past his retirement age, so the reality is he may be gone or physically/mentally disabled due to aging on any day.