Specfic Architect and Engineer risk management is an important part of running a design firm. Unfortunately, architects, engineers and other design professionals can and do make mistakes which can lead to a professional liability claim.
Professional Liability Insurance coverage can help protect your practice, but only if you understand how your coverage works and follow its terms and conditions closely. For proper management of the risk, you need to be actively involved. A risk management program isn’t something you can let run on autopilot.
Here are 5 secrets to better architect and engineer risk management:
1. Know How and When to File a Claim
With serious problems few and far between, knowing how and when you should file a claim is not always easy. Maybe you have never needed to file a claim before, you haven’t filed a claim with this insurer, or it’s been so long you’ve forgotten what you need to do.
Though the process can be daunting, it’s important to act as soon as you become aware of a potential problem with a design project. Insurers rely heavily on prompt reporting of claims and the conditions of your coverage may also require it.
Often, it may be hard to know if an issue needs to be reported or if it will resolve on its own. From an insurer’s perspective, it’s always best to err on the side of caution. Report any situation covered by your policy that may result in a claim as soon as you know about it.
2. Understand Your Claims-Made Policy Rules
Understanding your insurance policy is always a big key to managing your risk. But it’s particularly important when it comes to a professional liability policy. These policies are often written on a “claims-made” basis, meaning coverage is only included for claims that occur and are reported while the policy is in effect.
You must report your claim within the same policy period in which you became aware of the problem. If your policy coverage is renewed or modified between when you found out and when you filed a claim, your claim may be denied, exposing you to significant risk.
Many design professionals purchase tail coverage if they switch insurance providers or policy types. Tail coverage can be purchased when a policy is terminated and extends the limits of claims-made coverage. This ensures you are protected if a claim is filed after the policy has been canceled.
3. Track Your Policy Expiration Dates
All insurance policies come with expiration dates and it’s important to keep track of them on your firm’s calendar. Usually, this is the one-year anniversary of when you last purchased or renewed your coverage. Your policy documents will give the exact date for your records.
Expiration dates are very important in insurance for a couple of reasons. First, you don’t want to miss a renewal, go without coverage and face exposure to unnecessary risk. Secondly, you want to make sure all claim matters and potential claim matters are reported to your insurer before your next coverage renewal or modification.
With a claims-made policy nearing its expiration date, time is of the essence. You’ll want to ensure that you have processes in place to identify any potential claims and follow the proper procedures for getting the necessary information to your insurer in the days and weeks before your renewal. You may also want to consider purchasing tail coverage.
4. Establish Claim Reporting Procedures
Because it’s so important to identify and act on claims and potential claims in a timely manner, it’s important to establish some claim reporting procedures to minimize risk to the practice.
Often the team member who first becomes aware of an issue is not the one who will need to handle the claim. Miscommunication, failure to escalate and lost messages can result in a claim not being reported or reported late. Some insurers consider an old email that shows prior knowledge of the claim as grounds to deny a claim reported after the end of a policy period.
To reduce the risk of a denied claim, it’s important to have a reporting system in place. Team members can then report the claim internally through the proper channels so that you can meet all the necessary terms and conditions of your policy.
5. Educate Team Members on Architect and Engineer Risk Management
Good communication can go a long way toward reducing the risk your firm faces. But it’s important that everyone in your practice knows what to do in certain situations. A miscommunicated plan will leave you open to unnecessary risk.
Everyone on your team should understand that problems can and do occur. Give your employees examples of questions or statements from clients or stakeholders that could indicate a problem. Provide documentation of the procedures to follow to ensure claims and potential claims are immediately reported. Make sure everyone knows what channels of communication to use and how to confirm important messages are received.
Coverage for Architects and Engineers
Remember that for claims-made policies, you must report claims in the same policy period in which you became aware of them, so keep track of your policy dates. Your team members should know what to do when faced with a potential claim so it can be escalated through the channels you establish.
It can be a risk to your career and reputation if you don’t have the Professional Liability Insurance coverage you need to protect your practice. At Lockton Affinity, we understand the needs of design professionals like you. It’s why our coverage offers free professional contract reviews to policyholders to help ensure you are fully protected and specific architect and engineer risk management tips to help reduce the risks you face. Plus, with Lockton Affinity, you’ll benefit from competitive coverage and prices and best-in-class customer service.
Receive an indication of what our coverage will look like for your business today.