Protective E&O augments annual professional liability policies for design professionals and construction managers by providing broader practice policies for a specific project.
“And while broader in coverage approach, it is also a less expensive alternative when insuring the project professional construction and design risks as compared to a replacement professional liability insurance policy for design liability,” said Raymond FH Bustamante, vice president of
Berkley Construction Professional Underwriters.
However, Bustamante noted that insurers have to be careful about the language they use to develop policies for such professionals, as ambiguities may result in problems and confusion during the claims process.
“Brokers and insureds need to be aware of several seemingly innocuous clauses contained in many of these policies,” he stressed.
Among the sources of disputes, Bustamante added, is the “other insurance” clause. He explained that the vague language of such a clause gives insurers just cause to seek contribution from the policy holder’s other insurers to minimize their exposure. This clause often results in lengthy and costly litigation or dispute resolution as insurers tussle over who is responsible for what claim.
“It is also very important to understand how “minimum insurance” requirements apply to claims. A Protective E&O policy that demands contributing payments from the design professional’s other policies, including the insurance of not-at-fault sub-consultants, will often create serious disputes and delay resolutions,” he said.
