Be a Good Neighbor: Strategies to Mitigate Risk of Damage to Adjacent Properties

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By Andrew Mendelson, FAIA
Executive Vice President, Chief Risk Management and CX Officer
Berkley Design Professional, a Berkley Company

May 9, 2023

One of the emerging 21st Century perils for design professionals, particularly for structural and geotechnical/CMT engineers and architects, is the potential impact of new projects on the condition and even the integrity of adjacent properties.

An architect or engineer’s legal duty is to their client according to the scope and terms of the professional services agreement as well as the responsibilities embodied in state statutes for licensed professionals. However, consideration should be given to adjacent property owners during the planning stages and efforts should be undertaken to protect against claims that could be made by other “injured parties” on adjacent properties.

In states where the applicable law embodies the principle of “joint and several liability,” disproportionate responsibility and financial exposure can be allocated to the design professional—even if their actions had very little to do with the cause of damages to an adjacent structure.

Trends in design and construction claims and litigation indicate the casting of an ever-widening net with plaintiffs seeking defendants with deep pockets, such as the professional liability insurance policy and the assets of a firm. Therefore, it’s prudent for design professionals to be proactive in managing risk with respect to potential exposure for damages beyond the property line of the project, especially in dense urban or suburban areas.

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Berkley Design Professional’s 10th Anniversary – Cheers to 10 Years!

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By Larry Moonan
Executive Vice President, Chief Operating Officer, Berkley Design Professional, a Berkley Company

April 17, 2023

April marks the ten-year anniversary of Berkley Design Professional and we couldn’t be more excited! Over the past decade, we have established ourselves as a leader in the A&E marketplace by providing outstanding service to our brokers as well as comprehensive coverage, risk management support and exceptional claims handling for design professionals across the country.

The past ten years have been filled with some challenges and many successes, but throughout it all, our brokers have consistently supported and encouraged us. Our brokers have enabled us to grow and thrive and we are grateful for their unwavering commitment to Berkley Design Professional.

When we first started out, our vision was to create a business that would meet the unique needs of design professionals. Our goal was to provide insurance coverage that was tailored specifically to the risks faced by architects, engineers and other design professionals. Over the years, we have been able to do just that, offering a range of innovative insurance products designed to meet their diverse needs.

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To Sub or Not to Sub

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March 14, 2023

To sub or not to sub, that is the question.

Should a firm retain a subconsultant that flows through them on a project, or should a firm let the owner directly retain the other design professional?

It’s probably not the first time that an architect or engineer has seen this question posed, nor will it be the last.

I raise this question not because it is an exciting topic, but because it is a very relevant claim scenario that I have seen time and time again.

Here are some things to think about:

  • Has your client considered what it would do if its subconsultant stopped responding to phone calls or emails?
  • What would happen if the subconsultant simply shut its doors without notice to your client in the middle of a project?

I know that a firm would not think this scenario would happen to them, especially if the subconsultant is a firm that your client has worked with in the past and has a good relationship with. But it happens.

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What’s in a Name?

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Why names matter on a professional liability insurance policy

By Cindy Russell
Assistant Vice President, Senior Claims Examiner, Berkley Alliance Managers, a Berkley Company

December 8, 2022

Let me introduce myself. My name is Cindy Russell; well, my full name is Cynthia Russell. Maybe you need to know my maiden name was Ellis. Why does all this matter? Depends on what you need it for: looking up my records at the doctor’s office (Cynthia Russell), if I’m calling the financial company that has my IRA (Cynthia Ellis Russell) or social media (Cindy Russell), for example.

For architects and engineers, it matters for insurance coverage, contract considerations and the name by which the public knows them.

A design professional liability insurance policy (and likely other types of policies) provides coverage for a specific firm name or names. If a claim is made against a firm name that’s not included on the insurance policy, coverage may not be provided for that claim.

Sometimes even a small difference has a big effect. For example, John and Julie’s Architectural Group is a Named Insured on a policy but it also uses the legal name of J&J Architectural Group in certain markets or maybe it used that name previously but changed it a couple of years ago. A claim is made against J&J Architectural Group and that claim is based on a project it took on under this alternate name or the prior name. However, this additional name wasn’t provided to the insurance broker (or the insurance company underwriter) so it’s not a Named Insured on the professional liability policy and because of this it may not have coverage for the claim.

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BDP Risk® Delivers Mutually Assured Success

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By Diane Mika
Vice President, Director of Risk Management Education
Berkley Design Professional, a Berkley Company

At its simplest, insurance can be described as “a piece of paper and a promise.” Customers buy a
piece of paper (an insurance policy) and the insurance company promises to pay in the event there
is a claim.

It’s no secret that professional liability claims against architects and engineers can be expensive—both to the insurance company (cost of resolving claims and paying damages) and to the policyholder (paying deductibles). In addition to the hard costs of resolving a claim, design firms must also absorb the soft costs: lost staff time, lost opportunities, diminished relationships and increased future insurance premiums.

Therefore, the key to mutually assured success is mitigating claims. That’s where BDP Risk® comes in!

Our risk management education program provides relevant learning from the practitioner’s perspective coupled with the wisdom of decades of experience in the insurance industry. Based on a solid understanding of what factors and situations lead to claims against architects and engineers, our BDP Risk® training resources, materials and courses are designed to teach effective practices and strategies that can be put to immediate use to help customers avoid risk and reduce the frequency and severity of claims.

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How Can BDP Risk® Help You? Our Top 5 Concierge-Level Services

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By Candelario Lopez
Senior Learning Management Specialist
Berkley Alliance Managers, a Berkley Company

August 11, 2022

Design professionals and agents are busy people.

Fortunately, Berkley Design Professional’s Learning Management System (LMS), BDP Risk® offers several services that can save them time when they need risk or practice management advice. Here are the top five Concierge-Level services for both design professionals and brokers.

Design Professional Policyholders

1. Anytime Access and Support
Policyholders can access the BDP Risk® LMS at any time from any device! For questions, about how to do something or to start a learning path, you can contact a real person at 831.293.6254. If you prefer, you can also email [email protected] and your request will be answered promptly. You are only a phone call or email from receiving our Concierge-Level services.

2. Course Recommendations
We take the guess work out of choosing the correct course by providing recommendations to assist you in meeting your risk management or licensing requirements. Simply ask!

3. Tailored Learning Plans
We have created Learning Plans for various stages of a design professional’s career to assist you in making the correct decision and eliminating the guess work. These Learning Plans contain the courses recommended to obtain the knowledge you seek and are organized in a specific sequence to maximize effectiveness.

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The Benefits of Centralizing Your Claims and Risk Management Responsibilities

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By Mark A. Froehlich
Assistant Vice President, Senior Claims Examiner
Berkley Alliance Managers, a Berkley Company

July 14, 2022

Centralizing claims and risk management responsibilities for architectural and engineering firms provides significant benefits. It saves time, reduces cost and improves outcomes.

Based on decades of managing complex architects and engineers professional liability claims, I recommend designating a specific individual as risk manager to supervise all claims and potential risk issues for your firm — regardless of the size of your firm.

I have worked with many architectural and engineering firms and I can confirm that having a designated risk manager in place is more efficient. Some firms establish a standalone risk manager role, while others assign risk management responsibilities to a firm leader.

Project managers are necessary to communicate details of specific project issues, but they are often too busy managing projects to also effectively manage claims. Alternatively, assigning this role to a firm leader or another designated person allows more efficient communication with brokers, insurers and attorneys.

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The Driving Forces Behind Rate Change

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June 9, 2022

If you upgrade your Ford Focus to a Mustang before your next auto insurance renewal, would you expect to pay more? After all, you still only have one car. I don’t think anyone would be surprised to pay more in this situation. So why then do design firms and contractors get surprised by a premium increase when their annual fees/revenues remain the same, but they are performing work in different disciplines or doing different kinds of projects than last year?

The year over year exposure change is more than just a change in the rating basis. It’s the change in the firm’s entire risk profile. As a dramatic example, suppose a firm does $10 million of civil engineering work one year, but the next year that same firm does $10 million of structural engineering work. The firm will pay more in year two simply because they are engaging in a discipline with more risk.

This is the basic underlying concept of what actuaries mean by exposure-adjusted rate change. If the premium charged in the second year only reflected the move from civil work to structural work, the exposure-adjusted rate change would be zero. We fundamentally need to charge additional premium for the type of work that is more likely to give rise to more severe claims simply due to the nature of the work.

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Wherever Your Next Adventure Takes You, Have Peace of Mind with a Run-Off Policy

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By Barbara Block
Assistant Vice President, Senior Underwriter

May 5, 2022

You’ve worked hard for many years. Started your own business. Weren’t sure if you would make it, but you did. And, you fulfilled your dream of being the owner of a design professional firm. Congratulations!

Now the beach – or mountains or lake – summon you. It’s time to relax and enjoy the fruits of your labor with family and friends. Put all the pressure and stress of owning a business behind you. You’ve earned it and deserve it. But there is one more thing that you have to take care of to protect your future – purchase a run-off policy from Berkley Design Professional.

We know, another insurance policy? I thought I was done with that process, you say. Unfortunately, not. You see, even though your firm has closed its doors, you could still be liable for claims alleging wrongful acts for the services provided prior to the closure.

To protect yourself, you should purchase a form of tail coverage. Tail coverage covers incidents (claims) that happened during the time your professional liability policy was active, but were not reported until after the policy expired.

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Core Values are Key

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By Robert J. Connor, JD, CIC
Senior Vice President, Chief Marketing Officer, Berkley Alliance Managers, a Berkley Company

April 7, 2022

As we get ready to celebrate Earth Day on April 22 and think about making our world a happier, healthier place to live, it makes me think about our corporate environments. What makes them a happier, healthier place to work?

Discovering, communicating and living your organizations authentic core values sure does. Core values light the way for your employees, lead other people to join your organization and encourage others to do business with it.

Core values are not created out of thin air. A company needs to discover them. They are the essence of who the company is and what they will become.

The definition of “core” is “the central or most important part of something.” The definition of “values” is “a person’s principles or standards of behavior; one’s judgment of what is important in life”. A key word in each definition is “important”. Thinking about that definition, what is important to companies with whom you conduct business?

This is a key question to ask companies with whom you are considering doing business with. Do they believe what you believe and value what you value? If your values are not in alignment with those you transact business with, then there are likely to be issues as the relationship grows and evolves.

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