Cost of E & O insurance

[Allen42acj]

Wendy
I like that advice
Single family house, no insurance - I would include 2 clauses:
1 - limiting liability to fees paid, or whatever your state allows.
2 - a clause clearly limiting your liability to the service provided.

You all ways get me thinking..
I need to make up a list of what they want included in the plan..
Framing layouts
Schedules
So on..
Depending on how good the drawing is or the subs are,site visits are not needed..
At least for what I want to draw right now..
If a sub needs thier hands held,might be the wrong sub..

[RMorrison]

What to do about liability:

Rule #1 - keep your risk in reasonable relationship to your reward.

Single family house, no insurance - I would include 2 clauses:
1 - limiting liability to fees paid, or whatever your state allows.
2 - a clause clearly limiting your liability to the service provided.

Wendy,

I'm not trying to be argumentative here, but I have struggled with the ethics of this, and I really believe that, while it's certainly a nice thing for the design professional to be able to limit liability to a fee, I'm not sure how ethical it is.

For example, how would you feel about your doctor being able to limit her liability to the fee of the office visit? I don't think many patients would go along with this.

Similarly, if a design professional's screwup causes a client tens of thousands of dollars worth of damage (let's say, a bad siding detail that requires the entire exterior to be redone), or even worse, a detail that causes serious injury, should the design professional be able to hide and say, "Oh, sorry. But my liability is only $2,500. Ha, ha."? Aside from being dubious that a court would uphold such a weaselly limitation of liability, I wonder about someone who wants the rewards but is unwilling to step up to the plate with the responsibility that goes along with it.

It makes me very sad that the risk in this business is so disproportionate to the reward, but I don't think pretending that the risk isn't there, or trying to disclaim one's way out of legitimate responsibility, is appropriate. Maybe an attorney like George could opine.

[lbuttery]

Richard:

I agree with you that who ever signs and submits the permit represents the client and has a ethical responsibility to them to do right.

Some of us drafters work as subs for the builder, who is suppose to review the work product prior to submitting it, thus the limit on liabity for the drafter to the fee charged. We work as temp employees for the builder.

I now have a clause in my "limitation of liability" disclaimer that states that if the builder sends the plans to print and/or submits them for permit then they have been reviewed and found acceptable.

I had a builder who was in a rush, take a draft and send it to print for 9 copies and then the engineer found numerous errors, some ours, most the builders (we inherited 15 pages of the layout, due to illness of the builder). He was then mad for having wasted $200 on the prints. Then he tried to rush again the next two drafts.

I finally got him to realize that he needed to print one copy as
13 x 19 or send PDF to engineer and not print the rest until the engineer signed off.

Lew

[Allen42acj]

I have been thinking about this.
Most people try and go the cheap way saving money by hiring a low cost drafter..
It is their responsibility to check every thing then.
If they want to save and take a chance,fine.
If they want to hire some one like Wendy with a degree and more experience drawing they will pay for it..
Kind of like the name brand with an extended warranty..
It also depends on the job..Having good subs is important.Mistakes do happen..
But some one incompetent should not be doing working drawings..

[RMorrison]

I have been thinking about this.
Most people try and go the cheap way saving money by hiring a low cost drafter..
It is their responsibility to check every thing then.
If they want to save and take a chance,fine.

Allen,
The problem with this view is that the amount you charge has no relationship to the responsibility and liability you incur when you set yourself up as a professional drafting service. Your liability is not less just because you're "cheap". It is not a homeowner's job to check your work. (If you are drafting strictly as a subcontractor to a contractor, this may provide some reduction in liability. I get the sense that most people on this forum are working directly for homeowners, though.)

If you find yourself in big trouble with the IRS after using a part-time accountant working out of their home who makes a mistake, does it really matter that the accountant is not a full-fledged CPA in a big firm? (Other than the deep pockets issue, of course.) How would you feel about that cheap accountant saying to you, "Hey, you knew I was cheap - you should have checked the tax laws yourself!" ?

[Allen42acj]

Richard
I would not go to a part time accountant..
It might not be perfect.
I have caught lots of mistakes on plans that I have built from.
Most things were not built before I noticed,that's why good subs help.

I do not want to pass the blame for my mistakes..
With houses getting bigger more care has to be taken..
Your house and mine are probably very different..

Common sense should be used when taking on a job..
I wanted to show the back to,still working on it..There will be more windows..

[RMorrison]

Your house and mine are probably very different..

Since I live on a boat, I can guarantee it!

[Allen42acj]

Just like Quincy..
Magnum did better with the ladies..
I think that would be great living on a boat...

[John D Atkinson]

AIBD makes E & O insurance available to its members. The cost is about $3,000.00 for up to $300,000.00 gross receipts and there is a $5,000.00 deductible.
Contact: Jean-Marie Nigles

[lbuttery]

John:

check the qualifications, I don't think it is available to any member just those who are licensed or certified.

It's been awhile since I looked but that was my understanding.

Lew

[WendyWelton]

Allen,

Richard is correct.

"I do not want to pass the blame for my mistakes.."

What Richard and I are trying to tell you is not to avoid responsibility - it's to have the "punishment" have some relationship to the amount you are paid.

Let's say you pay a pretty smart geeky computer-nerd teenager to fix your brand new $5,000 super cad box. He says he can do it. You tell him you'll pay him $50.

He does something wrong and fries the whole thing. Does he owe you $5,000? Or did you assume some of the risk when you hired a non-professional?

Or - similar scenario - he's 300 miles away. He uses GoToMyPc to look at your computer and tells you what's wrong. You find "a guy" locally who knows how to swap parts. It's the right diagnosis, the right part, but "the guy" crosses some wires and blows it up. Is our friend the geek responsible? He put the right things on the drawings (the parts list), but the contractor didn't do the flashing right ("the guy" and the crossed wires).

I don't think in either case we'd expect the non-professional and uninsured teenager to foot the whole bill, much less tack on the snowballing costs from your lost business until the amount is so high that his college fund is wiped out as well.

Allen - I hear you not wanting to pass the buck. This isn't passing the buck. It's controlling the value of the buck.

A portion of every fee that somebody pays me is actually insurance. Insurance is protection against financial loss. You don't get full insurance coverage with no deductable without paying for it. You don't get that from anybody and your clients shouldn't get it from you.

I'm hammering away at you on this because I know how devastating a relatively minor case can be, and don't even want to think about a major loss without either coverage or a ****ed good contract that controls the bleeding.

[Allen42acj]

Wendy and Richard

I agree that the risk and reward should be in relationship.
Maybe I am just not expressing myself right.

I like the idea of the 2 Waivers you suggested.

Someone will still have to pay for the mistakes..Who?

This is going back to certifying drafters so the people can tell if they are getting someone that knows what they are doing or just bought the software and put out their shingle with no background..

Then if they go the cheap route and hire a person that shouldn't be doing it they know.

To put waivers and disclaimers all over a plan and thinking that takes away all responsibility is wrong.

To many people just want to blame others.
As a carpenter there is no insurance if I make a mistake..

Many years ago I worked for a guy that forgot the Garrison on a house and we had the gables built.
Same guy cut all the rafters without checking them first on another job.All to short.

Luckily I have not done anything that stupid..

[Larry Kumpost]

I probably should not get started in this but...

The really sad part of this whole topic is the way our legal system works...or perhaps I should say does not work. I don't call it our "justice" system anymore since, to me, that term has become an oxymoron.

What I am talking about is that just having E & O insurance can make you a more likely target. It is the "deep pockets" aspect of the legal system and is a close relative of the "shotgun" law suit. Basically it means an attorney will name people in a suite regardless of guilt because they have money or are backed by insurance. Given the cost of legal services, it can cost less to settle than to defend yourself. Since you must accept some level of "deductible" to keep the insurance costs reasonable guess who gets to pay.

[lbuttery]

To put waivers and disclaimers all over a plan and thinking that takes away all responsibility is wrong.

Allen:

Yes, if you are the one signing and submitting the permit and the client is your client.

No, if you are the drafter working for the builder (who signs and submits) and have no contracts with the client.

I am responsible for my mistakes with the product I turnover to the builder, once he accepts it, signs it, and submits it. Then my responsibility is over.

Lew

[Allen42acj]

Lew
I think you get my point.
If you do a plan for a home owner,you should not expect disclaimers to cover you..
My comments are not directed at you.


Warning,drafter has no construction experience.
Mistakes are the sole responsibility of the owner.
We just do pretty pictures that may or may not
work in real world. Software was on sale..

That should cover people..