Architects and Engineers: Unique Coverage

The photo at the right is of Independent Presbyterian Church in Savannah, Georgia. An example of a type of neo classical structure, it was re-built after the previous structure burned in 1889.

In an architects and engineers policy wording, there are a number of coverage sections and elements that are a little different than other professions. If you're aware of the coverages provided and additional options available you may be able to land an account because your competition isn't familiar with coverage, or perhaps isn't able to offer these extensions. It's certainly worth a look.

Not every policy will include all of the following, and some policies may be able to be endorsed to include one or more of these coverages. In no particular order of importance:

1. ADA, FFA and OSHA supplementary payments. These coverages reference the Americans with Disabilities Act, the Federal Fair Housing Act and the Occupational Safety and Health Act. If an architect or engineer renders services and the result of their design or engineering work violates one or more provisions of the act(s), the insurance company will reimburse the insured's legal fees. This is only for legal fees, not fines or penalties, and it applies when an administrative or regulatory action is brought against the insured. Limits are usually in the $25,000 to $50,000 range, and typically these limits are in addition to the policy limits and the deductible doesn't apply.
2. Pollution coverage. It may be included, but check the wording as there's no true standard for this. Some policies are "silent" so there's no specific exclusion and no specific coverage wording either. Some will define the coverage they will provide and it will be very specific, and still others will include the coverage but at a lower sub-limit, possibly $250,000.
3. Innocent Insured coverage. Instead of having the coverage "added" this is a situation where one of the usual policy exclusions does not apply. That exclusion is for dishonest, fraudulent and criminal acts, and will not apply to Insureds who are not involved in the excluded activity, provided they report such acts to the carrier as soon as they are aware of such activity.
4. Optional Extended Reporting Period (ERP). Every policy should have such a provision to allow the insured to add time to report claims should they decide not to buy coverage going forward. The length of time varies from one to five years, and a few carriers offer unlimited ERP. The longer the term of ERP the more premium your client will pay. This coverage extension is frequently not considered when purchasing a policy, but perhaps should be in the event the principal(s) are considering retirement at some point in the near future. Some policies will include a free ERP option if the insured retires provided they have been insured by the same carrier for a specified period of time, usually not less than three years. Others may also include a limited time of free ERP if the insured is disabled or dies during the policy period. If you're inclined to talk with other clients about life or disability insurance you should be talking with an A&E firm about the same issues.
5. "Attendance at Proceedings" supplementary payments - this isn't solely found in A&E policies but its worth noting. This coverage will provide additional limits for costs the insured may have to incur as a result of appearing at a hearing or trial or similar event at the request of the insurance company. Amounts per day are $250 and up, and the aggregate during the policy is usually $5,000 to $10,000 but can be higher. Check the policy, but usually these limits are in addition to the policy limits and no deductible applies.
6. Mediation credit. If a claim is resolved by mediation the policy deductible is reduced by a set percentage, usually 50%, and is usually subject to a maximum reduction, most commonly $25,000.

If you're not sure which additional coverage might be available, check the policy or make sure you ask your broker or underwriter.