If you are designing single family residences and earning 50k or even100k a year doing so, what type of liability coverage do you need? My question is hypothetical, I am not designing anything right now but would like to know.
How long then are you required to maintain the liability insurance - for instance, if you are no longer designing. Lets say you designed 1 home and only 1 home EVER. Are you then required to pay for insurance every year for the rest of your life in-case something was omitted in the plans and caused an accident?
How much does this usually cost? (for residential homes under 1 million dollars ) If you only make 50k and then have to pay thousands every year for liability... ??
liability is governed by state law - in Florida it's called "Statute of Repose". You'll want to look at the laws of the state you are practicing in for how long you carry liability for your completed projects.
nothing requires you to carry professional liability insurance--some clients (like public entities) require you to carry it in order to qualify to work for them. the county i work in requires that their consultants carry the liability policy for 2 years minimum after completion of the project.
liability insurance helps you sleep at night! it's all about how risk-averse you are.
the insurance rate is based on the volume you do every year, project types, coverage limits--too many variables to summarize.
i'm an incorporated sole proprietor, do about $70k annually in business revenue, work primarily in residential, have $1M coverage, and pay about $1,700 per year for the professional liability policy and another $400 or so for general and automobile liability.
In probably most states, there is not a legal requirement for having insurance in order to be licensed or to renew architect license. Professional liability is that liability such as contract, negligence (E&O), etc. from which legal action can be taken against you. Note: business entity types does not provide legal protection against negligence/tort so corporations, LLCs, LLPs, LPs, PLLCs, PLLPs, etc. won't do shit for that. It only applies to stuff like contractual dispute matters and related matters.
PLI (E&O) insurance is used for cases involving negligence, tort, malpractice. If you make an error in performance of your services, they make a legal claim against you. If ruling is against you, then you would need to pay for the 'wrong' (the sentence). The insurance covers it which you pay premium for so you don't have to magically conjure up say... $100,000 to a pissed off client that sued you for negligence and they won the case which you would have to come up with in typically 30 days or so or whatever from date of ruling or you would be penalized for contempt of court and that can get serious.
With that in mind, you should also keep in mind two things... statutes of limitation and statutes of repose. Ultimately, you will need to have insurance coverage covering such actions for as long as legal action can be taken against you.... the statutes of repose. In Oregon, that's 10 years. Each state is different. Some if unlimited statutes of repose / unlimited statutes of limitation so they can take place even 10,000 years from now. Of course, if you are deceased, there might not be anything for them to go after but they could go after estates of a person as long as it exists. It's not a legal thing that you have to have insurance coverage as much as it may be a practical thing that you may need to do. If you are making money and is successful, you are more than likely to be targetted for a lawsuit. Lack of money is not a guarantee but it is a typical factor that may cause for pause because sometimes it isn't worth the effort to sue a person who has not money because it is like trying to squeeze blood from a turnip but people aren't always thinking logically and may sue out of principle and to tarnish your name and force garnishing of any wages you make or income from business revenue you earn.
You need to research this for where you practice.
Apr 30, 22 7:13 pm ·
·
rcz1001
Agree because they are different kinds of issues, obviously and there isn't a magic wand of 'devices' to wave away all liability. Some of the issues don't fall under PLI and some cases may fall under general liability insurance, and others the business entity type may limit personal liability of the owners of the firm from some things in some circumstances. How that looks exactly, is kind of jurisdiction specific (federal, and individual states).
In some instances, there's no insurance to cover such and its on the business or you to deal with it.
Liability Insurance
If you are designing single family residences and earning 50k or even100k a year doing so, what type of liability coverage do you need? My question is hypothetical, I am not designing anything right now but would like to know.
How long then are you required to maintain the liability insurance - for instance, if you are no longer designing. Lets say you designed 1 home and only 1 home EVER. Are you then required to pay for insurance every year for the rest of your life in-case something was omitted in the plans and caused an accident?
How much does this usually cost? (for residential homes under 1 million dollars ) If you only make 50k and then have to pay thousands every year for liability... ??
liability is governed by state law - in Florida it's called "Statute of Repose". You'll want to look at the laws of the state you are practicing in for how long you carry liability for your completed projects.
nothing requires you to carry professional liability insurance--some clients (like public entities) require you to carry it in order to qualify to work for them. the county i work in requires that their consultants carry the liability policy for 2 years minimum after completion of the project.
liability insurance helps you sleep at night! it's all about how risk-averse you are.
the insurance rate is based on the volume you do every year, project types, coverage limits--too many variables to summarize.
i'm an incorporated sole proprietor, do about $70k annually in business revenue, work primarily in residential, have $1M coverage, and pay about $1,700 per year for the professional liability policy and another $400 or so for general and automobile liability.
In probably most states, there is not a legal requirement for having insurance in order to be licensed or to renew architect license. Professional liability is that liability such as contract, negligence (E&O), etc. from which legal action can be taken against you. Note: business entity types does not provide legal protection against negligence/tort so corporations, LLCs, LLPs, LPs, PLLCs, PLLPs, etc. won't do shit for that. It only applies to stuff like contractual dispute matters and related matters.
PLI (E&O) insurance is used for cases involving negligence, tort, malpractice. If you make an error in performance of your services, they make a legal claim against you. If ruling is against you, then you would need to pay for the 'wrong' (the sentence). The insurance covers it which you pay premium for so you don't have to magically conjure up say... $100,000 to a pissed off client that sued you for negligence and they won the case which you would have to come up with in typically 30 days or so or whatever from date of ruling or you would be penalized for contempt of court and that can get serious.
With that in mind, you should also keep in mind two things... statutes of limitation and statutes of repose. Ultimately, you will need to have insurance coverage covering such actions for as long as legal action can be taken against you.... the statutes of repose. In Oregon, that's 10 years. Each state is different. Some if unlimited statutes of repose / unlimited statutes of limitation so they can take place even 10,000 years from now. Of course, if you are deceased, there might not be anything for them to go after but they could go after estates of a person as long as it exists. It's not a legal thing that you have to have insurance coverage as much as it may be a practical thing that you may need to do. If you are making money and is successful, you are more than likely to be targetted for a lawsuit. Lack of money is not a guarantee but it is a typical factor that may cause for pause because sometimes it isn't worth the effort to sue a person who has not money because it is like trying to squeeze blood from a turnip but people aren't always thinking logically and may sue out of principle and to tarnish your name and force garnishing of any wages you make or income from business revenue you earn.
You need to research this for where you practice.
Agree because they are different kinds of issues, obviously and there isn't a magic wand of 'devices' to wave away all liability. Some of the issues don't fall under PLI and some cases may fall under general liability insurance, and others the business entity type may limit personal liability of the owners of the firm from some things in some circumstances. How that looks exactly, is kind of jurisdiction specific (federal, and individual states).
In some instances, there's no insurance to cover such and its on the business or you to deal with it.
My insurance rates are based on gross income (fees) and project types..... oddly only ever been sued on SF residential projects.
interesting...ours are set on volume (by cost) under construction for a given year
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