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Insurance for solo shops

ncsudirtman
(@ncsudirtman)
200+ posts Member

I started full time as a solo engineer & surveyor officially as of Christmas 2021, doing mainly land development design related projects on small to moderately sized commercial sites, single family residential and multi-family site. Projects vary in size & value considerably and I frequently either partner up with other engineers & surveyors or other consultants (RLA's & soil scientists) but have landed quite a bit of independently and am gaining more interest than I would've thought (all word of mouth and the work has been good so far thank you Lord!). A local surveyor has opted to handle the surveying needs & plats for most of my land development project which helps me tremendously being solo so I can focus on the engineering & permitting of the plans

 

I've got an E&O (professional liability policy) in place through a local NC agency that deals quite a bit with surveyors & engineers - they came recommended through the state surveyor society. I've inquired the first time last year about doubling my coverage from $1million agg/occ to $2million. Surprisingly, at the time, I was told that was the highest I could go - not sure if it was due to gross billings which they have always wanted to know or maybe if I was putting value of the project too low. I normally try to value the project at a subdivision's completed value with homes already built & sold or with a commercial site completely finished - normally I have access to most of this information between acquisition & development costs, lot sales & of course the turn key home sales (that's publicly available). I just see what I feel is a huge disparity between the coverage limits & what the value of a single, finished project might be and I'm in the midst of a renewal right now. Filling out the application again for the 3rd year in a row has made me notice this

 

My question is this - am I approaching the E&O coverage wrong? Should I handle it differently? Also, should there be any additional policies I should look at such as an umbrella policy? I haven't opted for CGL as it's just me & I'm rarely physically on the site seeing as the other surveyor handles the boundary & construction staking - maybe once a week at each site for 15-30 mins just to check up on the progress, EC aspects and occasionally for meetings. Any guidance on what you recommend as solo shop would be great as I just want to protect myself 7 my family - thanks

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Topic starter Posted : May 18, 2022 8:42 am
Peter Lothian
(@peter-lothian)
500+ posts Member

Do you have a "Limitation of Liability" clause in your written contracts? That's a very good way to protect yourself.

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Posted : May 18, 2022 9:07 am
FL/GA
(@flga-2-2)
5,000+ posts Supporter
Posted by: @ncsudirtman

maybe if I was putting value of the project too low.

As a Surveying Corporation with $2M E/O liability insurance we were never asked the above question in all 32 years of business. Have you consulted with your engineering peers that were in a similar situation as you? Good luck insurance is like gambling. 😎 

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Posted : May 18, 2022 10:49 am
RADAR and ncsudirtman liked

ncsudirtman
(@ncsudirtman)
200+ posts Member

@peter-lothian 

yes to the best of my knowledge - I think the limitation is for the value of the services rendered. Need to revisit this just to make sure. but I'm never one to just put my full trust in that alone I guess

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Topic starter Posted : May 18, 2022 11:13 am
Jim Frame
(@jim-frame)
5,000+ posts Member

I don't think coverage is based on the value of your projects as much as on how much damage you're likely to cause.  It's hard to mess up a subdivision so badly that the whole thing has to be scrapped.  Not impossible, just hard to do.

This post was modified 2 months ago by Jim Frame
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Posted : May 18, 2022 1:29 pm
Peter Lothian
(@peter-lothian)
500+ posts Member
Posted by: @ncsudirtman

@peter-lothian 

yes to the best of my knowledge - I think the limitation is for the value of the services rendered. Need to revisit this just to make sure. but I'm never one to just put my full trust in that alone I guess

That clause is your first layer of protection. The E & O insurance is the second layer. How thick do you need the second layer to be? You might want to consult a liability expert - maybe a lawyer, or someone at the insurance company (not sales). The consultation fee might be money well spent so that you don't over-insure to your financial detriment.

 

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Posted : May 18, 2022 2:08 pm

Chris Bouffard
(@chris-bouffard)
500+ posts Member

Tricky topic, when I was solo, I carried $1 million E & O and did a ton of commercial and other layout involving steel and anchor bolt layout, as well as residential infrastructure and housing layout.  I was comfortable with my coverage, even laying out multimillion dollar structures.

In what you described as being your case, it sounds like you work with others doing the initial work for your design.  If you make sure those who engage in the work leading up to your design and make sure that they are equally insured, any errors in their work resulting a claim against your work based on the information provided falls back on them to pay for. 

In the end, most of the things that can go wrong can get fixed through design adjustments and back charges to keep the insurance companies out of everything.  If they do get involved, they are not going to fight for you, they are going to settle before going to court, regardless of what their independent exports have to say. 

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Posted : May 18, 2022 3:01 pm
ncsudirtman
(@ncsudirtman)
200+ posts Member
Posted by: @jim-frame

I don't think coverage is based on the value of your projects as much as on how much damage you're likely to cause.  It's hard to mess up a subdivision so badly that the whole thing has to be scrapped.  Not impossible, just hard to do.

agreed as I would like to think the same when it comes to subdivisions but I'm always a pessimist haha

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Topic starter Posted : May 18, 2022 6:34 pm
ncsudirtman
(@ncsudirtman)
200+ posts Member

@peter-lothian 

yes I should've considered that

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Topic starter Posted : May 18, 2022 6:35 pm

Jim Frame
(@jim-frame)
5,000+ posts Member

In my case, insurance limits aren't chosen by me but rather are dictated by certain clients, mostly public agencies.  Even though I run a small solo operation, I have to carry $2M E&O, $1M general liability, and $1M auto.  The contracts pay for it all, though, so I'm not complaining.

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Posted : May 18, 2022 6:44 pm
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