Why Your Contract Needs a Limitation of Liability Clause

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

March 10, 2022

News headlines: Architect pays $1 Million for Design Error on $15 Million Construction Project; Civil Engineer Tagged with a $250,000 Jury Verdict Because of Drainage Design Error – I could go on. Want to avoid your name in a headline like this? Include a limitation of liability clause in all your contracts (or as many as you can) and then the headline might read: Design Professional Only Pays $50,000 After $1 Million Verdict.

Contracts are a valuable tool for protecting design professionals when considering and agreeing to participate in projects. One way a contract can do this is by including a limitation of liability clause to manage the potential financial risks involved. However, note that the enforceability of this type of contract clause varies from state to state.

Some things to keep in mind when drafting a limitation of liability clause:

  • it should be reasonable (you’re unlikely to get a client to agree to a limitation of $10,000 when your fee is $500,000). The limit can be a specific dollar amount, equal to your fee or limited to the available limit on your professional liability policy;
  • it may need to be more visible than all the other contract terms and conditions (for example, underlined, bolded or a larger font), depending upon case law in the state governing the contract;
  • and the contract is strongest if signed by both parties (in some jurisdictions the contract and/or its terms and conditions may not be enforceable if it’s not signed).
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Got Uncertainty? We can help!

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

February 10, 2022

Uncertainty is all around us. You can’t deny it. If there is anything the past two years have taught us it’s that you never know what’s coming around the corner. This is unnerving and can create anxiety. As human beings, we crave stability and structure – even when we think outside the box. At Berkley Design Professional, we not only acknowledge this uncertainty, we embrace it. We want to help you embrace it too so that together we can transform your uncertainty into opportunity. Doing so enables you and your clients to confidently build a better tomorrow.

This idea of transforming uncertainty, is our Why, our rallying cry and why we are passionate about serving our brokers and policyholders.

Our new vision statement states it more succinctly:

To transform uncertainty into opportunity so you can confidently build a better tomorrow.

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Let’s Write More Express 24!

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December 9, 2021

Next time your A&E client needs professional liability insurance, think about Express 24 from Berkley Design Professional!

What’s Express 24? For qualifying firms, Express 24 is a 24-month, guaranteed premium policy with an aggregate limit that spans both policy years.* Best of all, it offers design firms substantial limits at a discounted cost!

This makes Express 24 a great solution for any design firm looking to keep their professional liability insurance and lower their cost. In short, it’s comprehensive coverage at a cost savings!

Sounds great, doesn’t it?

Now, how exactly does it work? Glad you asked! Let’s take a look at an example:

  • XYZ Architects has an Express 24 policy with limits of $1 million per claim / $3 million aggregate
  • This means they have $3 million dollars in limits to span the 24-month policy period! The maximum paid for each claim would be $1 million dollars. The total amount paid for all claims would be $3 million dollars.

To summarize, Express 24 offers an aggregate limit of no less than two times per claim. The aggregate limit spans the full 24 months. Higher policy limits at discounted prices!

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Thankful for Insurance? You betcha!

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By Victoria (Tori) Rabadi
Assistant Vice President, Marketing Communications

November 10, 2021

Say the word insurance to almost anyone and watch them roll their eyes while a disinterested look comes over their face. This, my friends, is not the response people in the insurance industry deserve.

Most of us are fortunate and should be thankful we have insurance coverage available to protect and stabilize our lives and businesses if a disaster or unexpected event strikes. As such, a little gratitude and thankfulness is in order.

It would be wise for us to reconsider how we think about insurance. Insurance is amazing! There, I said it and I mean it. Here is why.

Let’s remember that insurance protects people and businesses against financial losses, damages, and injuries associated with unforeseen events. It protects your health, your life, your home, your property, your car, your business and your reputation; any of which should you lose, would be devastating, to say the least. Wow—insurance does all of that? Amazing!

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Parenting Advice That Can Save You Money on Professional Liability Insurance

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

October 4, 2021

Parents often struggle with ways to get their children to develop good habits that will serve them well later in life. There is the age-old debate of the carrot versus the stick and which one, reward or negative consequences works best.

At Berkley Design Professional, we come down squarely in the carrot column! We believe that positive reinforcement is the way to encourage our policyholders to develop beneficial risk management habits.

Berkley Design Professional policyholders can earn up to 40% in credits on their annual professional liability insurance policy. Yes, we did say 40%. How, you ask? I would be happy to explain.

Policyholders that use a limitation of liability clause in their contracts for professional services can earn up to a 25% premium credit each policy year. More specifically, we look at the percentage of fees that a design firm has under contracts with limitation of liability clauses with the liability limited to $250,000 or less and we take that percentage and cut it in half to arrive at the credit percentage–up to a maximum of 25% credit. For example, if a design firm has 40% of their fees derived from contracts that contain a limitation of liability clause limiting their liability to $250,000, then that firm would earn a 20% premium credit. It is that simple!

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Per Project Primary Limits Coverage

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

September 9, 2021

Berkley Design Professional has always strived to provide innovative coverages and Per Project Primary Limits is one of those coverages!

We believe this new way to look at and cover A&E professional liability risks can provide significantly increased value for our policyholder’s insurance dollar.

A few years ago we introduced Per Project Primary Limits in many different ways and thought this innovative coverage would become very popular. We were mistaken.

To figure out why we weren’t writing more of this game-changing coverage we contacted a number of our brokers. And the resounding answer–it was too confusing to explain to a client or prospect and they didn’t have the time to explain a coverage they probably would not sell. So, we put our heads together to see if we could provide a simpler way to describe this innovative approach to A&E professional liability insurance coverage. Here’s our updated, simpler explanation.

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You’re Never Alone

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Free Claim Prevention Assistance

By Anthony Andersen
Senior Vice President, Professional Liability Claims Manager | August, 12, 2021

Having a Berkley Architects, Engineers & Consultants Professional Liability Policy means that you’re never truly alone. Even when you’re dealing with a situation that isn’t yet a formal claim, but is giving you an uncomfortable feeling that it may soon become one, Berkley Alliance Managers is here for you!

This post was updated on January 25, 2024. Find it here.

About the Author

Anthony has managed and handled claims for more than 25 years. He brings a wealth of A&E and construction related experience as well as knowledge regarding best practices and risk management. In his role as Professional Liability Claims Manager, Anthony provides managerial oversight to our claims staff. He received his Bachelors of Business Administration from Iona College. Anthony is based in Central Valley, New York.
Contact Anthony at [email protected].

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10 Reasons Why Design Firms Should Use the BDP Risk® Learning Management System

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

July 12, 2021

Design professionals are busy these days and often find it difficult to step back from their day-to-day business responsibilities to delve into the world of risk management education.

Fortunately, Berkley Design Professional has made it easy for our policyholders to find just the right risk management sessions and courses! The BDP Risk® Learning Management System (LMS), provides 24/7 online access to relevant risk and practice management content, streamlined online learning and education activity tracking and reporting.

Let’s take a look at the top ten reasons to use the BDP Risk® LMS today!

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Need Excess? We’ve Got You Covered!

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

June 10, 2021

You receive a call from your design firm client asking for higher limits for their professional liability insurance policy. And you think…will their current carrier provide the Excess limits? If yes, has the firm reached its limit on the number of Excess endorsements on their policy? If no, what do you do?

For either of those questions, Berkley Design Professional has your answer – BDP Excess. We have an admitted, follow-form Excess Professional Liability policy that can be written over a competitor’s entire policy, on a specific client basis or on a specific job basis.  We offer limits up to $10 million.  In addition, BDP Excess is available to each of our brokers in all states. How is that for flexibility?

At Berkley Design Professional, we recognize that when your clients call with an Excess request, you need to be able to respond quickly to meet their needs. Otherwise, they may start looking for another broker. As a former broker myself, I can relate to that scenario as it happened to me. I lost a considerable account because the incumbent professional liability insurance carrier would not provide a specific-job excess quote and I could not find a viable, cost-effective alternative in sufficient time to meet my client’s needs.

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Fee Dispute Mitigation Reimbursements Coverage

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A small silver lining in an otherwise difficult situation

By Liz Molina
Assistant Vice President, Senior Claims Examiner, Berkley Alliance Managers, a Berkley Company

May 10, 2021

As long as I have been managing claims for design firms, one of the primary risk management principles held by architects and engineers (A&E) professional liability insurance (PLI) carriers is that a design professional should avoid suing their clients for unpaid fees.

Why? Because a suit for outstanding fees is usually met with a counterclaim for professional negligence. And, while in general, those allegations trigger coverage under an A&E PLI policy, the attempt to recover the outstanding fees is not covered because fees are not considered damages as defined in A&E PLI policies. Unfortunately, the outstanding fees become part of the negotiations when attempts are made to resolve the negligence allegations. In most cases, the design firm has to significantly compromise its fee claim – and sometimes completely walk away from it – in order to get the negligence claim resolved, even when some of the negligence allegations lack merit or would be difficult to prove. This leaves the design firm frustrated because they end up not getting paid, while at the same time having to spend their policy deductible to defend and/or settle the negligence claim. In essence, they actually lose more money, which does not even include the lost billable time that was spent helping to defend the claim instead of working on projects that generated income.

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