Cost of E & O insurance

[WendyWelton]

Andy,

"Errors & Omissions" is shorthand for Professional Liability Insurance. It covers you for mistakes - the design-world equivalent of doctors' malpractice.

Some policies cover errors or omissions that were made while the policy is in effect. Others, the kind I have and I believe the more common, are called "Claims Made" policies - they cover any claim made during the policy period. A claim is usually defined as "an allegation of wrong doing in conjuction with a demand for money or services".

The come in packages like 250/500. That's short for $250k limit per claim, and $500k limit per year. Just like with all insurance, higher deductables equal lower rates.

They generally only cover problems with your work. You really do need to read the policies thoroughly. Most will not cover anything characterized as fraud (like keeping the money and not doing the work, or a non-registrant using the word "architecture" in promo or contracts, illegal in most states).

I just learned a new one - that they also generally do not cover "product liability". One of my agreements referenced the drawings as the "deliverable product". Oops. I've changed the words to a simple "what you get".

It's a never ending topic. Get insurance. Get it from a good broker who will actually educate you along the way. Don't listen to anybody who tells you to avoid using Preclaims Assistance or to handle fender benders on your own. Get it, learn how to use properly, conduct yourself ethically, foster good relationships with both clients and builders, and then just conduct your business and send in the checks.

You can't disclaim or insure your way out of every problem, nor is there any bulletproof way to avoid future conflict - any more than there's any proven way to avoid disease or earthquakes. I'm pretty sure that getting out of bed in the morning is hazardous to your health!