Cost of E & O insurance

[WendyWelton]

Bill,

I'm in the process of shopping for new insurance - so have some current input. I'm currently paying close to 4% of my gross. They underwrite each business separately. I'm told it's based on your gross, the dollar volume of construction that represents, and the relative risk of your market segment. Residential is generally considered higher risk than commercial - because it has both a non-professional clientelle and because there's an emotional component. On the other hand, my new broker is guiding me towards emphasizing that I'm a residential specialist, who has both more in depth knowledge of residential construction, and procedures in place to deal with this clientelle. They're telling me that 1%-2% is typical for E&O for architects in my states overall, so I'm hopefull that I can maybe get down to maybe 2% or 3%.

Let's just say that if I could get down to $2650, I'd be jumping for joy. I don't know what your dollar volume is, but if it's low, you may also be paying more if you're a non-registrant. I believe the insurance companies make some assumptions about all that education behing beneficial. If you have tons of experience in design and/or construction, perhaps see if a different broker will plead your case better.

What state are you in?

Steve,

If you're being paid for design and don't have E&O, you might as well just go hire a hooker and throw away all your condoms. Seriously, one wrong choice of client or one false allegation can set you back years. You can be as right as rain, and it will still cost you a small fortune in legal fees to prove it.

And no, incorporating won't save you. Simply being diligent and ethical in your business will certainly help, but a single dishonest client can churn up enough fiction to make Hogwarts look like your average kindergarten.

[Steve C.]

Wendy,

Interesting analogy, but you did make your point. Thanks.