Do any of the independent specifiers that frequent this group have liability insurance for their practice? Why or why not?
Monica, a specifications consultant friend, is trying to get insurance and finding it difficult and expensive.
Before I add my $.02, I would like to hear others opinion/experience. Thanks.
Your questions if very timely - my past 6 contracts have not only required E&O insurance ($1,000,000) but also General Liability ($1,000,000) and General Auto ($1,000,000). I currently carry $100,000/$300,000 on my professional and I tell clients that they wouldn’t want to pay the fees that I would have to charge to increase to $1M. They seem okay with that. I do have the $1M general liability - which is reasonably cheap. I cross out the requirement for General Auto, since I don’t typically drive my car to the jobsite. It seems that they are just passing down their requirements to all the subs. I know some independants don’t carry any insurance with the thought that “they won’t sue me if I don’t have insurance”. I wouldn’t be able to get the large scale projects that I have without any insurance. Although I don’t have the requested $1M, it is better to say I have something than nothing at all. The price is based on annual billings. Also, I am not a registered Architect, but my husband (part owner of our LLC) is, and therefore the E&O insurance is less expensive since at least one owner is a design professional. There really isn’t an insurance category for what we do though - which is to bad, but maybe someday…
This has been a subject of discussion within SCIP for many years. It seems to hinge on several points.
Is the specifications writer a consulting design professional? Despite our desire for “status”, the fact is we provide a technical writing service. Therefore, professional liability insurance, while obtainable, may not cover the para-professional services provided. With exceptions in some states, professional registration is not required for those who produce construction specifications. Typically, the agreement for spec writing services state that the spec writer will produce specifications under the direction of the responsible design professional.
Does the professional liability insurance carrier have loss experience in order to establish the premium for coverage of specifications writing services? SCIP discussions have indicated that there have not been losses, therefore the premium charged is not based on loss experience.
As a registered architect, I can get E&O insurance. But, I don’t provide architectural services when I prepare construction specifications. If I had E&O insurance, I doubt it would cover the services I perform.
I think it would be preferrable for those spec writers who are sole proprietors and have no employees to consider “independent contractor” status on a project-by-project basis (like a temporary employee) and try to be covered under the design professionals E&O policy.
The issue is not only protecting the spec writer but protecting our clients. If someone sued me, I don’t have assets to even start to cover the claim. This leaves my client unprotected if their E&O carrier says they won’t pay for actions by the spec “consultant.”
I’d sure like to read opinions of others on this subject.
John
One point to add to your comments is the fact that your clients would be smart to keep you on their side if they get sued. You would be more valuable on their side.
I carry $1,000,000 of E&O insurance, because I also provide construction administration services to architects. Also, because I will be providing CA services on an airport terminal building project of about $17,000,000 in construction costs, I was not looked at as a “small firm”, even though it is just me alone. This jumped the premium up about $1,000 per year.
Further, When I renewed this year, the yearly premium jumped up $1,000. Gulp! However, the potential for claim (due to CA services) is alot more than just for spec writing services. It certainly is justifiable when thinking about lost time in defense and/or negotiations.
I am curious whether John’s statement about “technical writing services” has been tested in the courts. The California Architects Practice Act seems to include specification writing under the definition of architectural services.
Response to Scott Parish:
I certainly cannot give legal advice. That’s for each one’s attorney. I don’t know about this matter being “tested in the courts.” I don’t see a violation of the law (Architects Practice Act) that would lead to a court having to render a judgment.
Herman Hoyer many years ago got a written determination from (the then) California Architects Board (now Board of Architectural Examiners) that specifications writing was not governed by the Architectural Practices Act. That is, writing specifications did not require licensing as an Architect.
The interpretive key, I think in reviewing the Architects Practice Act (Section 5500.1 “Practice of Architecture”), in Paragraph 5500.1.a, is the phrase “professional services which require the skills of an architect.” It may hurt the egos of spec writers, but the technical writing performed by a spec writer does not require the skills of an architect. Many of the most competent spec writers are not licensed architects or professional engineers.
The Architects Practice Act does identify a professional service by architects of “coordination of technical and special consultants.” We spec writers are them:
“technical and special consultants” that Architects coordinate. We are technical writers who work under the direction of the Architect of Record to produce construction specifications.
That’s why I don’t see Professional Liability Insurance as being applicable. There’s no professional service being performed.
I agree with John. I think we perform a para-professional service, and I think if we are very careful how we word our contracts, we can minimize the likelihood of problems. We can never eliminate them. After all, I could sue any one of you for anything, logical or not. For instance, my contract reads, re: looking at certain submittals, i.e., paint, that I will act as an advisor only. I never sign a submittal, usually I scribble my reply on a blank piece of paper and FAX it back, or FAX back their transmittal, with a notation like: I think you can accept this, or recommend you check this out.
Thanks John Regener and Jo Drummond for your responses. I have read so many times about the various individuals who have their hands slapped by the Board for practicing architecture without a license, that the language of the Practice Act seems to introduce a question in my mind.
I believe that since I perform CA services, in addition to specification writing services, that I am treading in the “practice of architecture” realm. For that reason, I feel that I need E&O insurance. I do choke on the cost.
Scott:
I am performing some services directly for facility owners. For that, I am looking into E&O insurance and for that my architect license will be applicable, I believe.
John:
You make an interesting point about offering services directly to an owner versus offering services to an architect. The first being the practice of architecture, the second not.
Wow! Great discussion. Thanks to everyone for contributing.
As an architect currently working as a project manager and risk manager in a large firm (also having past experience as an in-house specifier), I would like to offer a few thoughts on this issue:
I have never asked for an interpretation of the Architect’s Practice Act (“Act”) as it relates to the preparation of specifications. However, the definition given in the Act of what constitutes the practice of architecture clearly lists “specifications.”
Regardless of what the Act appears to say about specifications, I am not aware of any unlicensed individual being prosecuted for writing specifications without a license. This could be due to any of a number of factors, including that the Board of Architectural Examiners (“Board”) may have decided not to worry about this issue or that the Board has not received any complaints from anyone claiming to have been harmed by someone writing specifications without a license. It could even be that the Board has not diligently pursued any complaints that they may have received (the Board in California is notoriously lax in enforcing the Act).
Regardless of whether writing specifications constitutes practicing architecture, I believe that anyone that does happen to be licensed as an architect, and is writing specifications, is subject to meeting the standard of care the same as any other architect. I don’t think you can simply decide that you are an architect on one job and not on another, or when performing one service rather than another. I also don’t think that contracting directly with an owner rather than another architect makes one bit of difference. If you are an architect, you are ALWAYS practicing as an architect, even when you perform services that would otherwise be exempt under the Act (single family homes, interior design, etc.). If you are licensed, you are held to the standard of care, period. Think of it like you were a doctor. You can’t simply turn your head and say “I’m not on duty today so any medicine I practice today is not subject to the standard of care.”
I have no idea whether it is a good business decision for an independant specifier (licensed or unlicensed) to obtain professional liability insurance. However, in my position as Risk Manager for my firm, I will say that more and more, our clients are requiring in our contracts that any consultants that we hire must be licensed and must have appropriate levels of insurance. We have sometimes been able to negotiate waivers for specifiers, but not always. I can assure you that the clients that retain us (both public and private) are taking this issue very seriously.
Can independant (licensed and unlicensed) specifiers obtain professional liability insurance? My own research indicates that the answer is yes. I’m not passing judgment about whether the insurance is affordable, but it IS available - even to unlicensed individuals. I conducted this research specifically because of the issue I raised in item #4, above, wherein my clients are asking me to provide licensed and/or insured consultants. Before I started placing that demand on consultants, I wanted to know if it was a demand that could be met.
None of this is meant to imply that specifiers that happen to be licensed as architects or engineers are necessarily better specifiers than those that are not licensed. Fortunately, for those of us out here hiring many of you independant specifiers to do consulting specifications work, the overall quality of service continues to be high. However, I do worry about the fact that there does not seem to be enough young specifiers coming up through the ranks to replace those of you nearing the end of your careers.
A couple of quick responses …
There are analogies for medical doctors that I think apply. Medical doctors perform audits of medical records. Paraprofessionals (unlicensed) also perform audits of medical records. These audits are to extract information from the records and prepare reports. Certain levels of skill and medical knowledge are required. However, the paraprofessional is not practicing medicine just because there are times when a medical doctor (licensed professional) performs the task.
The same can be said of most tasks performed in an architectural office. Preparing drawings is a task that licensed architects perform. But seldom on a substantial project does the architect of record personally work on the drawings. Are drafters required to be licensed? Obviously, the answer is no.
The issue Joe brings up is, when is an architect not an architect? And that’s a nice gray area worth some more thinking and discussion.
But the issue of professional liability insurance is related and the key, I think, is understanding when a spec writer is a collaborating, licensed design professional (like the structural engineer or the electrical engineer) and when is the spec writer like an independent contractor (like a member of the architect’s staff only working on a contractural basis rather than being paid a wage or salary).
From the point of view of liability insurance, I think it’s important that the services of the spec writer be covered. As an independent contractor, I would like to see the spec writer’s activities covered under the Architect’s professional liability insurance. If a rider needs to be added or if there is an additional premium to be paid, then that can be worked out as a financial matter.
What I think is the problem … and I’m researching this … is whether professional liability insurance obtained by a spec writer who is a licensed design professional actually provides coverage for services that are not the practice of architecture (technical writing). The fact that unlicensed persons provide the service make it paraprofessional. My concern is that, having the liability insurance, the coverage is invalid because I’m not a consulting design professional but merely a technical writer whose activities are under the direction of another design professional.
I think there are lots of insurance companies who will sell me a professional liability policy. I’m uncertain that the policy will actually cover my services.
Of course, if professional liability insurance is required, then the fee for my services must increase to cover this cost of doing business.
I’m sure I don’t have all the answers…that is why I find this discussion so interesting. I’ll try to shed a little more light on how an architectural firm in the position of hiring one or more consultants for a project looks at this issue:
To a certain extent, all consultants we hire are covered by our insurance. From our client’s point of view, if something goes wrong they are going to sue us and not the consultant who may have been mostly or solely responsible for the problem. It will be up to us to make a claim against our own consultant if we believe they are responsible for some or all of the problem. To the extent that we lose a lawsuit or settle out of court, our insurance covers the loss up to available policy limits. There is no distinction made as to whether the loss was partially or completely due to the services provided by one or more of our consultants. So, in that sense, specifiers, engineers, acousticians, etc. are all covered. However, it would be a particularly bad business decision on our part if we were to retain a bunch of consultants that didn’t have insurance against which we could make a claim in the event we suffered a loss that was due to the consultant’s work. The real risk to us is that if we suffer a loss our insurance premiums will go up regardless of whether the fault was with us or a consultant. We can’t prevent that, but we can certainly require that our consultants (most of them, anyway) have insurance that will cover their responsibility for their work if it was in error.
John and others have raised the concept of “paraprofessional” status for specifiers. I stand by my original statement that specifiers that happen to be licensed architects or engineers are accepting the responsibility that goes with the license and that there is not some circumstance that would allow them to provide specifications that did not meet the standard of care for architects or engineers. For unlicensed specifiers, I can tell you that the professional liability insurance coverage for my firm does not recognize you any differently. Anyone we hire (licensed or unlicensed) that is not hired as an employee is an independant contractor. Even if we hire a licensed electrical engineering consultant, their legal status is that of independant contractor. This is a status that has to do with labor laws. I don’t think it plays into the issue of professional vs. paraprofessional.
Unlicensed employees working in architectural offices are specifically exempted from meeting the requirements of the Architect’s Practice Act. The key word is “employee.” The licensed employer is definitely not exempt. Unlicensed specifiers working as in-house employees in architectural firms are likewise exempt.
Joe: Your comments are great!
To keep the pot (discussion) simmering …
There are MANY firms who “hire” staff as independent contractors. Maybe the key term is “staff,” irregardless of professional license. These firms “job out” production of documents: working drawings, renderings, door hardware schedules, food service equipment specifications and the general production of construction specifications that aren’t produced by “consultants” (registered engineers and landscape architects).
The issue, as Joe has helped bring into focus, is whether there is a different Standard of Care when the person who performs the service is or is not a licensed design professional. I’d like to say, “no.”
I’d like to say “no” because the Architects Practice Act (in California) does not require the task of specifications writing to be performed by a licensed architect. I say “no” because the Board of Architectural Examiners does not prohibit unlicensed (paraprofessional) persons from performing the service of construction specification writing, just as other professions allow paraprofessionals to perform some of the services that licensed professionals perform.
The consequences of restricting construction specification writing to only licensed professionals (architects) would be havoc. Already there is a shortage of construction specification writers. The specification writers I know are all very busy. The magnitude of K-12 public school, community college, university and medical projects in planning and design is so great that I have great difficulty seeing how the limited number of licensed and unlicensed persons now writing construction specifications (“in-house” and “out-house”, or “dependent” and “independent”) can produce the necessary construction specifications.
I think this is in many ways it’s a “it ain’t broke, don’t fix it” deal except that there need to be MORE competent specifications writers (including independent, paraprofessional specifications writers) … both in terms of increased competence and increased numbers of spec writers.
So, back to the original issue of professional liability insurance, how does professional liability insurance cover someone who is not performing a professional service?
Wow, this is a great discussion! Thank you, Joe Back, for your sage contributions. And thank you, John, for your always provocative comments. Wish I could add to it, but I hope to err on the side of conservatism, write careful contracts, and keep my fingers crossed.
Great discussion. My compliments to everyone who has shared their experiences.
Our firm has 2 licensed architects (3 specifiers total) and derive about 70% of our income from specifications consulting. However, we also perform accessibility consulting (including plan reviews and post constucton inspections required for public projects in Texas) as well as some construction mangagement(advisor)work, and some due dilligence investigation work.
We carry $1,000,000 E/O insurance for a variety of reasons, but mostly because we were sucked into a law suit in 1995 by one of our spec consulting client’s attorneys who was looking to minimize his client’s exposure. This client (who is still one of our largest in term of annual billings) then insisted that we carry insurance if we were to continue doing work for them. We complied, and have since had several other clients require it as part of our agreements.
We do not advertise in any way that we have the coverage, but admit that it is in force if asked. Like many independent specifiers, we continue to define our services as “contract labor” or “para-professional”, assisting the design professional in the preparation of written construction documents, but that we are not performing design services. We also ask that they embrace us as they would any other contract laborer in the event of a problem in which they beleive we contributed. So far, this has worked fine, but as Jo mentioned, these words are no protection against a law suit.
We are now being asked to increase our policy limit to $5,000,000 by a client who wants us to perform some project management work (define the project scope, find the design consultants, collect contractor bids, and monitor the construction - all as an advisor -we will not hold any contracts). We are in a renewal year and I am told to sit down when the quote comes in as it will probably increase 25-40% even without the increased limit (insurers and re-insurers have really taken it on the chin the last couple of years). Selling hot dogs on the beach is beginning to sound better all the time.
I still maintain that E&O insurance companies have not developed application questionaires that reflect the true nature of our business. The only ones I’ve seen have been directed to architects or engineers, and are difficult to answer. If they don’t know what we do, would we really be getting our premiums worth?
Since we are part of the design professional’s team, and have common goals and interests, it would make sense to be covered under the same prof. liability policy. In case there is a problem, the design professional would likely want the specifier to be on his side, and not on the side of the opposition.
Because licensing is a state by state issue:
What is the effect on prof. liability insurance of a specifier licensed in one state, but living and working in another where he or she is not licensed?
Would it make any difference if the projects were, or were not, in the state where he or she is licensed?
I’m wondering if those who have said that they carry E & O or whatever insurance have ever had a payoff under the policies - or even a viable, i.e., satisfactory, defense of a suit.
I mean there are agents who will sell anyone insurance against anything - HMO, cancer insurance, etc., but when it comes to paying off, they sing a different tune.
David Lorenzini’s comments made me think of this. We’re sitting at our various computers bemoaning the fact that we can, or can’t, or will, or won’t get insurance, and I wonder if that is the question we should be asking.
It may be better to ask: If we get the insurance, is it any good, does it protect us against whatever it is we do. I’m beginning to wonder what it is we do!