Deciding to get professional liability insurance is a crucial moment for many architects and start-up companies. It usually means that a company has been granted a project at a large scale and with a large budget, or simply a client has approached the company with concerns regarding a specific task. Ultimately, it can simply mean a company is getting serious about its future.
Architects contribute to the U.S. architectural landscape in various ways, such as building people’s dream homes or building impressive city towers. Professional architects bid on numerous thrilling and profitable projects that may lead to enormous success, along with career development.
The possibility to bring in significant amounts of money is one of the main reasons why becoming an architect is escalating. According to BDC Network, in 2019, the number of professional architects in the U.S. increased to over 115,000. Additionally, the same year, another 41,000 people were on their way toward licensing.
It’s significant to have in mind that building a structure may be an extreme venture that goes beyond the interpretation of a client’s vision. Apart from making blueprints, the architect is usually accountable for other tasks like understanding zoning, securing permits, ordering materials, being involved in inspections, and working closely with suppliers.
With such a broad range of duties, you realize how something can be overlooked, or a wrong decision could happen. That’s why architect insurance is vital for securing your future in the industry.
For that reason, this article guides you through everything you need to know about professional liability insurance for architects. So, read below to find out more.
What Is Professional Liability Insurance For Architects
Professional liability insurance for architects protects architects and architectural companies that provide professional services to clients. Professional liability is beneficial when an architect or architectural company makes an accidental mistake that can cause damage to its client.
The architect insurance you need for your architect business is very different from the general liability policies, which usually cover just claims such as property damage, slip and falls, and false advertising.
What Exactly Is The Difference Between General Liability And Architect Professional Liability Insurance
It’s significant for every architect to understand the difference between general liability and architect insurance. If you already own a general liability insurance policy, you might believe that any claim or lawsuit associated with your business can be covered. Based on the kind of accusations being made against you or one of your employees, a general liability plan might not be enough.
For instance, if you have an architectural business and one of your clients gets an injury while visiting your office, general liability insurance can cover the eligible claim. The reason for that is because liability is intended to protect you against non-employee bodily injury.
On the contrary, if your company finishes a building design that violates the city’s zoning decree, then you need to have adequate architect insurance to cover the client’s claim of neglect. This is because zoning decrees, for example, are part of your professional duties as an architect, and general liability insurance policies don’t cover professional wrongdoings.
What Professional Liability Insurance For Architects Covers
Professional liability insurance for architects usually includes standard coverages like:
- Network Security and Privacy
- Pollution Liabilities
- Professional Liabilities
- Advertising and Multimedia
Claims-Made vs. Occurrence Policies
First and foremost, most of the architect insurance policies are made or written on a claims-made basis. In such a case, a claim has to be filed with the insurance company as quickly as possible and during the ongoing policy year. Besides, if a liability claim occurs before a retroactive date, then it won’t be covered regardless of when it’s reported.
If you have a claims-made professional liability policy, make sure to keep your policy active without lapses in coverage. It’s because the date of application of your policy is also the retrospective date.
If there are any lapses in coverage, you will lose your initial retroactive date, which leaves you vulnerable to future claims. Furthermore, if a claim is filed against you before the retrospective date of your insurance policy, then it won’t be covered.
As an illustration of how claims-made policies work, let’s say your policy went into application on 1/1/2020 and ended on 1/1/2021. For it to be covered, the time of loss will have to be between 1/1/2020 – 1/1/2021, and you will also have to file a claim with the insurance company within that same period.
Occurrence policies are made and conducted the same way as your home or auto insurance. It means an eligible liability claim is covered only if the complainant’s damage or injury occurred during the period of your policy.
What Is Not Covered By Your Professional Liability Insurance For Architects
Thus far, you probably have a better understanding of what an architect professional liability policy covers, so let’s proceed with what it doesn’t cover:
- Property damage
- Illegal acts
- Deliberate malpractice
- Employee injuries
- Employment disputes
- Non-employee physical injury
- False advertising
Always relate to your policy documents to make sure of all the details concerning what is and what isn’t covered under your specific liability plan.
How Much An Architect Professional Liability Insurance Cost?
If you work for an architectural company, they probably have a liability policy that covers their company and all its architects. It’s essential to check with your manager how much you are covered for, especially the maximum limit.
However, if you are an independent architect running a small business, then you will need to buy your professional liability insurance for architects. The premium you pay will be based on different factors like the kind of projects you completed, the location of your business, your income, and the deductible amount you choose.
For an independent architect, the standard professional liability insurance policy usually starts from around $1,500 per month because performing amazing architectural work that serves humankind well is really something special. Nevertheless, the risks associated with it are diverse and substantial.
Someday you might encounter a nuisance lawsuit, or maybe you’ll make a mistake. In any case, you’ll have to protect your reputation and your financial resources as well. Professional liability insurance for architects can prepare you for those kinds of bumps along the way.
The work of an architect includes complex choices and responsibilities, planning projects, observing construction, supervising an office, fulfilling client satisfaction, and securing the health, safety, and well-being of the public. So, buying architect insurance isn’t just about being risk-averse, it’s a crucial part of having the resources, the knowledge, the assurance, and the professionalism to undertake and handle multiple risks all at once.