TZL 1397 (web)

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O P I N I O N

With the market hardening for AEC professional liability insurance, an accurate and complete application may help keep your firm’s premium as low as possible. Professional liability applications

A s AEC firms face a tightening market for professional liability insurance, they need to explore every opportunity to establish themselves as favorable risks to underwriters. A detailed and carefully completed insurance application may help keep your firm’s premium as low as possible – even in the current rate environment.

Rob Hughes

The following areas in typical professional liability insurance applications relate to an AEC firm’s billings and may represent opportunities for premium discounts: ❚ ❚ Feasibility studies. Historically, most insurers discount billings for feasibility studies, master plans, reports, and opinions by as much as 60 percent to 75 percent. Even if the feasibility study ultimately becomes a full-blown project, you may still be able to list some billings in this category. For instance, if your study explores four alternatives and one is chosen, the cost of analyzing the other three options should be categorized as billings for feasibility studies. ❚ ❚ Abandoned projects. Most insurers either discount or exclude billings for projects abandoned prior to the construction-documents phase. These projects may be on hold, pending financing or other considerations, or truly abandoned. Consequently,

there is nothing likely to give rise to a claim. This category is exceptionally relevant given the large number of projects dropped entirely or on indefinite “hold” due to the COVID-19 pandemic. Take time to review and identify these projects and related revenues. ❚ ❚ Project-specific policies. Many insurers significantly discount billings for a project covered by a project-specific professional liability insurance policy. Unfortunately, this category is diminishing as fewer projects are being insured under project- specific polices given a lack of underwriter interest in providing this coverage. ❚ ❚ Construction management. Discounts of 35 percent or more may apply to agency (not at-risk) construction and facilities management. However, consult your broker about the CM-related revenues

See ROB HUGHES, page 10

THE ZWEIG LETTER JUNE 21, 2021, ISSUE 1397

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