AE Blog - How Much Will Professional Liability Insurance Cost an Architectural Firm?
Professional liability insurance protects your firm against claims and/or allegations of negligence, errors or omissions in your delivery of professional services. In order for an insurance company to evaluate and price their risk in insuring your firm, they ask that you complete an application for insurance. The application captures information about where your business is located, how much revenue you earn annually, the discipline and project mix your firm engages in, and the risk management protocols you have implemented that help minimize your exposure to claims, as well as if anyone has ever made a claim against your work in the past.
If you are in the process of starting a new firm, the underwriter will want you to provide estimates of what you anticipate for your first year in business. A solid business plan goes a long way in terms of providing underwriters comfort, so I recommend submitting a brief narrative stating your goals for the new firm and the general direction you intend to take the firm and your previous project experience.
In order to qualify for Architects Professional Liability insurance, you must hold a registered and/or licensed architectural license. To get a quote, you must:
- A complete application. I recommend either typed electronic application or one printed in a clear, legible manner. Submissions that are put together hastily tend to be priced higher or declined by underwriters.
- A resume showing representative projects, education and any Society/Association affiliations that you hold. Associations show the insurer that you are committed to your profession and that you participate in continuing education.
- A Narrative stating your mission statement as well as the direction you intend to take your business and your goals for growth.
Once you commit to purchasing a policy you will need to renew the policy annually to maintain coverge of all the work you have performed under your new firm. Professional liability insurance is written on a “claims-made” basis. This means a policy must be in force at the time a claim is made in order for coverage to apply. Also all policies contain a “retroactive date”, which is the inception date of your first professional liability insurance policy.
It is not possible to get coverage for work that you performed before you started buying professional liability insurance. Also, coverge is not provided for any circumstance that has occurred that you believe may give rise to a claim. This all adds up to the importance of buying your professiona liability insurance coverge when your start your practice.
For more details you can download this article at Hall & Company’s Risk Management Library.