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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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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