I am having a hard time renewing my professional liability insurance because I work on many school projects that use the General Contractor Construction Manager delivery method. One insurance company will not insure me at all and the other insurance company will triple my premiums. My broker is looking into other insurance companies.
Is anyone else who works on GCCM projects experiencing this problem?
BTW, GCCM is also known as Construction Manager At Risk (CMAR).
Don’t know what additional risk there would be. From my perspective, developing specs for a traditional project is no different from a CMAR project.
The renewal application from my insurance company gathers a lot of information about the project types I’m involved with, but I don’t recall ever seeing a question about the construction delivery method. It’s hard to imagine why it matters, but your company evidently views GCCM / CMAR as an increased risk. I’d be curious to know why. Presumably, there is a higher incidence of claims, perhaps directed at design professionals in particular.
I too am puzzled why GCCM (CMAR) projects would be more of a liability to the design professional. I guess the insurance companies ran the numbers and determined there is more litigation with those projects.
So now I am faced with a difficult decision of either significantly raising my rates for GCCM projects or just not taking on any future projects that are GCCM.
Is the increase significant enough to warrant a substantial rate adjustment or consider eliminating a sector of business? The cost for professional liability should run in the range of 1% to 1.5% of billings. I have long considered that a reasonable cost, even though it is out of balance with the actual risk involved in spec consulting.
Jeffrey,
My new insurance premiums will triple which will bring my insurance premiums up to over 5 percent of my billings.
David - This made me look at my recent renewal application (with Travelers); there are no questions about project delivery methods. FYI - Only standout narrow-focused question is portion of condo/coop projects.
Have you included recommended indemnification and limit of liability provisions in your contracts with AEs? If so, it’s hard to understand why the concern on the part of your provider. Hopefully your agent is properly shopping your policy rather than just sending in a renewal invoice.
This may be influenced by the reality that on Design Build projects the Contractor is likely to sue the consultants when the cost of the work they designed was greater than what was estimated when the contract was signed.
Mark,
My insurance renewal form also asked the percentage of Design Build projects that I do, which is none.
As it turns out the question, on my insurance renewal form, of doing Construction Management at Risk was aimed at general contractors NOT consultants. The insurance company assumed by the way I answered the poorly worded question that I was acting as general contractor on 30 percent of my projects. Thus the reason for the higher insurance rates.
After I explained my situation to the insurance agent she resubmitted my form to the insurance company and my rates lowered.
This is another example of why clearly worded contracts/forms are so important.
Wow, so they were inadvertently proposing to insure you as a general contractor, and a CM at risk even, rather than a spec writer.
Here is the exact question.
____% a. Feasibility, programming, planning, or economic studies.
____% b. At-Risk Construction Management
____% c. Fast Track/Design Build as Prime
David - Strictly as a spec writer (only), I would have indicated zero for all three categories…I directly do not provide any of those types of services, although I have worked on some projects that were of those type delivery methods. I think you read more into the question than should have?