Architects Insurance Policy Information
Architects Insurance. As an architect, there's nothing more satisfying than seeing your vision progress from a concept to a draft to a permanent structure that people will use and enjoy for decades. But of course, no architecture project is without its risks: a single mistake can result in costly delays or even structural problems that can have devastating consequences. And in our litigious society, lawsuits have become commonplace.
Architects design buildings and other structures, such as bridges, dams, entertainment complexes, highways, and marine facilities. They may design renovations for existing buildings. The architect is hired by a client to prepare plans and construction documents, including all the detailed specifications. The details include the type and grade of construction material and the size, space, location, and grade of land.
The final plan must meet the client's requirements and budget while being aesthetically pleasing. While architects often use the services of engineers, they may also be trained as engineers to confirm or develop the specifications of detailed portions of a project, such as rules, codes, environmental impact, and life safety regulations.
Some municipalities require any renovation work to meet historic preservation construction techniques. Once construction begins, the architect often consults and monitors the operation, and is available for clarification, advice, and updates or modifications to the original plan. Landscape architects, in addition to assisting landscape contractors, may also advise city planning departments.
Architects insurance coverage not only pays judgment costs, it can prepare you for a lawsuit by paying defense costs.
Architects insurance protects your firm from lawsuits with rates as low as $37/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked architect insurance questions:
- What Is Architects Insurance?
- How Much Does Architects Insurance Cost?
- Why Do Architects Need Insurance?
- What Type Of Business Insurance Do Architects Need?
- What Are Architects Risks & Exposures?
- What Does Architects Insurance Cover & Pay For?
What Is Architects Insurance?
Architects insurance is a type of insurance that provides coverage for architects and architectural firms in the event of a financial loss due to errors and omissions, property damage, or other types of claims related to their professional services.
This can include coverage for liability, errors and omissions, and property damage, as well as protection against claims related to contract disputes, design defects, and other types of professional risks.
It is designed to protect architects and architectural firms from financial losses that may result from their professional activities, and can help to ensure that they are able to continue providing services to their clients without interruption.
How Much Does Architects Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small architect businesses ranges from $37 to $59 per month based on location, type of projects, payroll, sales and experience.
Why Do Architects Need Insurance?
Architects need insurance for a variety of reasons, but ultimately it is to protect their business and personal assets. Architects work on a wide range of projects, each with their own unique set of risks and challenges. These projects can range from small renovations to large-scale commercial developments, and even just the planning and design process can expose architects to potential liabilities.
For example, if an architect fails to properly design a building and it collapses or experiences structural issues, they could be held responsible for any damages or injuries that occur as a result. This could result in costly lawsuits and financial damages for the architect, which is why liability insurance is crucial to protect against these types of risks.
Additionally, architects often work with expensive equipment and materials, which can be at risk of damage or theft. Architects insurance can help cover the cost of replacing or repairing these items if something goes wrong.
Furthermore, architects often work with clients who may have high expectations and strict deadlines. If an architect is unable to meet these expectations or deadlines, they may face legal action or financial losses. Professional indemnity insurance can help protect against these types of risks and provide coverage in the event of a dispute or legal action.
Overall, insurance is an important tool for architects to protect their business and personal assets from potential risks and liabilities. Without it, they could face significant financial losses and potentially even bankruptcy if something goes wrong on a project. So, it is always better to have insurance coverage as an architect.
What Type Of Business Insurance Do Architects Need?
General Liability: This provides coverage for two types of claims: property damage and bodily harm to third-parties. The claims come from clients, subcontractors or employees. For uninsured firms, such claims can result in dire financial consequences.
Architects insurance provides cover for your legal liability in the event of third party property damage (e.g. ladder falls onto a car) and/or bodily injury to a member of the public.
Commercial Property: Helps protect the place where you do business - whether it's a building in an office park or an historic home you've converted to an office - and the tools and equipment you use to conduct business, like drafting and design equipment, model building tools, and furniture - whether you own or lease them.
Workers Compensation: workers comp protects your firm against the cost of compensation arising from claims made by employees or contractors as a result of illness or injury at work. Workers compensation insurance is required by labor law in most states for any non-owner employees.
Umbrella Insurance: Also called excess liability insurance, is exactly what it sounds like; it's a safety umbrella to cover and protect you in the event of an emergency. An emergency in this case would be any tragedy that would cost your firm beyond your existing coverage limits.
This architects insurance policy extends the limits of some of your underlying liability policies with a single premium.
Individually extending the limits of multiple insurance policies can significantly increase each premium you pay for those plans. However, when you invest in umbrella insurance, you pay a single, smaller premium and typically receive more coverage than you would have otherwise.
Umbrella insurance will cover the remainder of any settlement above and beyond what your current policy will pay.
What Are Architects Risks & Exposures
Premises liability exposure is limited due to lack of public access at the office location. If clients visit the premises, they must be confined to designated areas. To prevent slips, trips, or falls, all areas accessible to clients must be well maintained with floor covering in good condition.
The number of exits must be sufficient, and be well marked, with backup lighting in case of power failure. Parking lots and sidewalks need to be in good repair with snow and ice removed, and generally level and free of exposure to slips and falls. Off-site exposures include job sites and clients' offices. There should be policies and training as to off-site conduct by employees.
Professional liability exposure is extensive. The types of jobs accepted require varied levels of knowledge and expertise and determine the potential for loss. For example, bridge design will require a different type of knowledge than designing a one-family dwelling. The loss potential should a bridge collapse could be catastrophic due to the possibility of bodily injury and property damage.
The exposure increases if the firm fails to conduct thorough background checks to verify employee's accreditations, education, and licensing, including verification of continuing education requirements, permit clerical workers to do tasks that only professionals should handle, or if error checking procedures are ignored or are inadequate. Very serious losses may result from failure to document decisions and actions or to secure client approval. Customers can suffer financial loss due to construction delays and cost overruns.
Workers compensation exposure will vary based on the type of job. Since work at the office is done on computers, potential injuries include eyestrain, neck strain, carpal tunnel syndrome, and similar cumulative trauma injuries that can be addressed through ergonomically designed workstations.
Some firms have significant off-site exposures, primarily to inspect job sites and projects underway, which may include bridge work, oil derricks, and housing developments. Architects can be injured off sites by slips and falls, falling objects, falls from heights, electrical panels, and wiring, construction machinery, flying debris, noise, and automobile or aviation accidents. Protective equipment may be required.
Property exposure is generally limited to that of an office, although there may be some incidental storage or an area for meetings. Ignition sources include electrical wiring, heating and air conditioning systems, wear, and overheating of equipment. Computers and other electronic equipment may be targets for theft.
Crime exposure is from employee dishonesty. Hazards increase without proper background checks, along with monitoring procedures and securing of all records to prevent unauthorized access. All job duties, such as ordering, billing and disbursing, should be separate and reconciled on a regular basis. Audits should be performed at least annually.
Inland marine exposures involve accounts receivable if the firm offers credit, computers, special floaters for equipment taken to job sites, and valuable papers and records for clients' information, completed architectural designs, and drawings in progress. The computers are extremely sophisticated and specific for each job and may have custom programming. Power failure and power surges are potentially severe hazards. All software and data should be on backup disks and stored off site. Paper drawings should be stored in fireproof cabinets.
Business auto exposure is generally limited to hired and non-owned and rental exposure. If vehicles are provided to employees, there should be written procedures in place regarding personal use by employees and their family members. All drivers must have appropriate licenses and acceptable MVRs. Vehicles must be maintained and records kept in a central location.
What Does Architects Insurance Cover & Pay For?
Architects can be sued for various reasons, mainly due to allegations of negligence or breach of contract. Insurance, specifically professional liability insurance (also known as errors and omissions insurance or E&O), can protect architects by covering the costs of legal defense and potential settlements or judgments. Here are some examples:
Design errors: An architect may be sued if a design error leads to a building's structural failure or problems with its functionality. Professional liability insurance would cover the costs of defending against such claims and pay for damages if the architect is found liable.
Construction delays: If an architect fails to deliver project documents on time or if their designs cause delays in the construction process, they may face legal action from the client. Insurance would help pay for legal defense and any damages awarded to the client for the delays caused by the architect.
Building code violations: Architects can be sued for designing buildings that do not comply with local building codes, leading to additional costs or project delays. In such cases, insurance would cover the costs of defense and any resulting damages.
Miscommunication or coordination issues: If an architect's poor communication with contractors, clients, or other parties results in project errors or delays, they could face legal action. Insurance would help cover defense costs and potential settlements.
Intellectual property infringement: An architect could be sued for copyright or trademark infringement if they use a design that too closely resembles another designer's work. Professional liability insurance would cover the legal defense costs and any damages awarded to the copyright or trademark holder.
Cost overruns: If an architect's design leads to cost overruns or budget issues, they may be sued for breach of contract or negligence. Insurance would cover the legal defense costs and any damages awarded to the client.
For each of these examples, professional liability insurance can help protect architects by paying for the costs of legal defense and any damages they may be liable for. It is essential for architects to obtain the right type and amount of insurance coverage to safeguard their practice and reputation in the industry.
Commercial Insurance And Business Industry Classification
- SIC CODE: 8712 Architectural Services, 0781 Landscape Counseling and Planning
- NAICS CODE: 541310 Architectural Services, 541320 Landscape Architectural Services, 541340 Drafting Services
- Suggested Workers Compensation Code(s): 8601 Architectural or Engineering Firm - Including Salespersons & Drivers, 8603 Architectural or Engineering Firm - Clerical
Description for 8712: Architectural Services
Division I: Services | Major Group 87: Engineering, Accounting, Research, Management, And Related Services | Industry Group 871: Engineering, Architectural, And Surveying
Establishments primarily engaged in providing professional architectural services. Establishments primarily engaged in providing landscape architectural services are classified in Agriculture, Industry 0781. Establishments primarily engaged in providing graphic arts and related design services are classified in Industry 7336, and those providing drafting services are classified in Industry 7389.
- Architectural engineering services
- Architectural services
- Engineering services: architectural
- House designers
Architects Insurance - The Bottom Line
To find out exactly what type of architects insurance you need and how much coverage you should have, speak to a professional insurance broker to go over your insurance blueprints.
Additional Resources For Professional Services Insurance
Get informed about small business professional services insurance, including Professional liability, aka errors and omissions (E&O insurance), that protects your business against claims that a professional service you provided caused your client financial loss.
- Answering Service
- Armored Car
- Attorney Lawyer
- Background Music Services
- Business Consulting
- Chemical Engineers
- Civil Engineers
- Claims Adjuster
- Commercial Laundries
- Commodity Broker
- Corporate Wellness
- Court Reporter
- Credit Bureaus
- Debt Collection Agency
- Detective Agency
- Diaper Services
- Electrical Engineering
- Environmental Consultant
- Executive, Career & Life Coaching
- Executive Search Firm
- Expert Witness
- Financial Planner
- Financial Services
- Funeral Directors
- HR Consultant
- Inspection Bureaus
- Insurance Agents & Brokers Insurance
- Mediator - Arbitrator
- Medical Billing
- Music, Drama & Dance Therapy
- Office Machine Repair & Maintenance
- Piano Tuners
- Project Management
- Safety Consultants
- Speakers Bureaus
- Tax Preparer
- Temporary Staffing
- Title Abstractors
- Valet Parking
- Specialty Consultants
- Specialty Service Business
The professional services industry, which includes occupations such as lawyers, doctors, accountants, and architects, often deals with sensitive and complex issues that carry a high risk of liability. These professionals are expected to provide their clients with expert advice and guidance, and any mistakes or oversights can result in significant financial consequences for both the client and the professional. This is where insurance comes into play.
Business insurance provides protection against the financial repercussions of potential mistakes or accidents that may occur while providing professional services. For example, a lawyer may make an error in their legal representation that leads to a financial loss for their client. Without insurance, the lawyer would be personally responsible for covering the cost of this loss. Insurance helps to protect professionals from these types of financial burdens and allows them to focus on providing high-quality services to their clients.
In addition to protecting against financial losses, commercial insurance can also provide legal defense for professionals facing legal action as a result of their work. This can be especially important for professionals in high-stress or high-risk fields, such as doctors or architects, who may be at a higher risk of being sued for professional negligence.
Overall, the professional services industry needs insurance to protect against financial losses and legal action, ensuring that professionals can continue to provide high-quality services to their clients without the added stress and burden of potential financial consequences.
Minimum recommended small business insurance coverage: Business Personal Property, Employee Dishonesty, Accounts Receivable, Computers, Valuable Papers and Records, General Liability, Employee Benefits Liability, Professional Liability, Umbrella Liability, Hired and Non-owned Auto Liability & Workers Compensation.
Other commercial insurance policies to consider: Building, Business Income with Extra Expense, Earthquake, Equipment Breakdown, Flood, Computer Fraud, Forgery, Money and Securities, Special Floater, Cyber Liability, Employment-related Practices Liability, Business Auto Liability and Physical Damage and Stop Gap Liability.