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Professional Liability insurance for Consulting?
Old 07-03-2014, 01:43 PM   #1
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Professional Liability insurance for Consulting?

As I get ready to pitch a possible consulting job, I am starting to try to think through what I need to nail down. One thing that concerns me is possible professional liability arising from a consulting/contract job. I know a number of you have done this sort of work after the end of a formal career. How did you deal with this risk? Tight contract language that absolves you of risk/indemnifies you? Professional Liability/E&O insurance? I had a brief chat with an insurance broker who indicated that it might be challenging and expensive to obtain insurance coverage.

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Old 07-03-2014, 02:21 PM   #2
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I have an E&O policy that covers me for my own general design work, but I often do work consulting for other Architectural firms due to my specific background. I make it clear in my contract that my work for them is covered under their E&O insurance. I have done this with (4) firms to date and not one of them batted an eye about it, and signed the contract with that exclusion. Of course, Architects are terrible businessmen, so they likely did it without getting approval from their brokers and/or legal department. But MY insurance broker was the one who suggested I do this.

My approach is that I they have the contract with the client, not me. Since I can't control things so I am not covering it under my E&O insurance, and my insurance would be through the roof if I did.

My own projects are small houses, retail shops, etc. The work I do for other Architects is typically high rise construction with many million dollar fees and construction costs. E&O insurance is based on risk and fee/construction costs. So that is how I keep my numbers down. For what it is worth I pay about $2000 a year for my E&O insurance.

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Old 07-03-2014, 02:31 PM   #3
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I looked at a Professional Liability policy to cover me while substitute teaching. I was quoted about $1600 for $2MM General Aggregate (whatever that means). My broker checked if reducing the limit reduced the premium. I think she said $1MM was $1400. Holy cow!

I'm probing the school district to determine what coverage I have while working for them. Their standard self-insurance letter gives limits of $200K/$300K which is inadequate. Their email also mentioned 'excess' coverage so I asked what those limits are.

No matter their limits, I really don't trust a public entity to have my best interests as a priority if the doo doo hits the fan.
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Old 07-03-2014, 03:20 PM   #4
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We had E&O when I worked and it covered me. The only consulting I do now is to my old firm. Just to the firm itself, not to any clients. So really I don't need it personally.

If your profession has a an association of members, they might have info on providers that could provide more info

In addition, I would explore forming an LLC
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