Clients in the architects and engineers (A&E) market need savvy brokers on their side – more than they might realise. Whether the risk of a lawsuit come from errors in the design of a project, or from failure to correct mistakes during construction, a lot can go wrong. In addition, A&E firms tend to underestimate their risks and choose inadequate coverage. The following tips will help brokers deliver expedited service to A&E clients and provide them with the best possible coverage for their needs.
1. Understand the risks and potential costs
South Western Insurance Group’s specialized A&E product covers the three most common claims umbrellas:
- Design errors related to mistakes made in drawings or structural designs
- Inspection errors that occur when an item is overlooked during a professional inspection
- Third-party claims brought against everyone involved with a particular project, regardless of how briefly or indirectly
Errors and omissions (E&O) and commercial general liability (CGL) gives clients peace of mind while mitigating the mounting legal costs that come with lengthy claims. Senior Underwriter Darlene Hazzard has been underwriting for almost fifteen years and has seen firsthand how costly these claims can become. “We still have open A&E claims here that pre-date my time,” says Hazzard. “The fact is that the longer they are held up in court, the costlier these claims can become.”
2. Work closely with the client to keep records updated
One of the most important precautions clients can take is to keep brokers updated on records related to potential claim action. Brokers should encourage A&E clients to report any incidents as they come up if that incident, however unlikely, could possibly turn into a formal claim. “We work with a third-party administrator who investigates our A&E claims, gets lawyers involved, and interviews our clients directly,” explains Hazzard. “But part of our role as facilitator includes keeping records related to potential claim action as well. As soon as an insured becomes aware that a questionable incident has taken place, that event should be reported to us as a circumstance while the details are still fresh in their mind – even if they do not believe it will turn into a formal claim.” Problems such as errors in design often don’t emerge until long after the client has moved on to other projects. So, brokers should steer their clients in the right direction by ensuring key information is relayed while it is fresh in their minds.
3. Ask questions to clarify the best policy limit
A common tendency Hazzard has observed among A&E clients is to opt for the lowest policy limits available. This, she says, is how clients end up with severely inadequate coverage. “Some insureds’ organizations do not require them to carry E&O, so they look for the lowest limits they can get. But $250,000 will not go very far if you are hit with a sizeable claim. In the years it can sometimes take to settle, defence costs can grow very quickly. And that is why – even on policies with a $1 or $2 million limit – we offer the option of costs in addition.” Adding costs to an insured’s A&E coverage goes a long way toward preventing limit erosion by defence costs and other legal expenses. To counter the insufficient default choice, brokers can clarify the exact costs their clients will need for the right coverage.
4. Get as much detailed information as possible for the insurance submission
When it comes to a successful policy submission, the more information the better. Brokers should take care to fill out applications completely, even if specific sections don’t necessarily apply to their clients’ business. Since precise insurance requirements will differ for individual accounts, a good A&E submission is based on four key elements:
- A fully completed, dated, and signed application
- Complete claims information
- Details regarding the insured’s experience
- A thorough summary of fee income
“Brokers should bear in mind that every question on our application is there for a very specific reason,” says Senior Underwriter Darlene Hazzard. “And while not every section will necessarily apply to every business, it is vital that relevant sections get completed in full.” For brokers, the key to providing exceptional service for A&E clients is to act as the client’s advisor. This means understanding the risks, working closely with the insured and getting enough information from the client to provide them with the best possible coverage. This ensures no liabilities are overlooked and potentially saves clients thousands of dollars in claims costs.