Cost of E & O insurance

[WendyWelton]

Draw4Food,

What's your name?

"I hereby say a curse upon Wendy's legal antagonists." Huh? I'm not creating the news, merely reporting it. I'm not trying to throw a wet blanket on anybody's party, I'm trying to educate so that others might avoid the fire that somebody then wants to put out with a wet blanket.

The problem with limiting liability to fees paid is that it only applies to your original client. The big liability with condos is that they are then sold. The purchasers are not a party to the original contract, and the limit does not apply unless the builder writes it into each sales contracts (yeah, right, like that's gonna happen - and like the RE agents won't bounce that clause real fast). Worse, your one client, who's "in the business" - knowledgeable about quality standards and such, then morphs into a dozen or more, who are that perfect storm of uneducated (about construction realities), emotional (about their homes) and worst of all, a committee.

If you're going to do condos, and you don't have insurance - a limit on liability will do you no good. A clause that has the builder "release, indemnify and hold harmless" your company will. Indemnify means the developer pays your legal fees for whatever occurences are specified in the contract. Definately, absolutely get an attorney to write that contract. Oh, and vet the developer to make sure he has insurance that would kick in.

Then of course there's the question of whether the developer will sign it. If you're a licensed architect, you most likely have insurance, so we're talking about non-registrants. The developer is probably hiring a non-registrant to save money (red flag #1). Unless there's a clear discussion about liability and the developer is providing the insurance, I'd walk away. If he's willing to sign that document and doesn't have insurance, he's an idiot (red flags #10-50). If he's not willing to sign it, I'd consider it an amount of risk that simply did not justify the fee.

And, as Lew pointed out, even if your firewall holds, ya still got those (%*(#^# legal fees.

If you've read many of the threads on this topic, you'll know that I myself am still paying tuition to the School of Hard Knocks, in the form of legal fees in a case that started in 2002. Yep - 5 years and still counting.

So, you can discount the advise of those who've already paid for the lesson. I appealed to the gods of economics and the gods of human nature to have those laws repealed just because I didn't think things should be the way they are. They turned me down flat and spanked me on my way out the door.