Pro Points - 6/20/11

Pre-Claims Assistance-

Free for Everyone?

Jim Maxson, CPCU-Senior Risk Manager

Many of our design professional clients are concerned about the effect a claim will have on their insurance program.  They ask if it will adversely affect the cost of their insurance, or whether it will jaundice the relationship with the insurance company.  There is a widespread belief that, like their auto insurance, the minute a claim is submitted the insurance company will increase the rate, or threaten to cancel the policy.  Actually, most reputable professional liability insurance companies encourage early notification of claim situations, or pre-claim issues.

A "claim" must be reported, otherwise coverage could be impaired. Pre-claim reports (everything else) are initiated voluntarily.  Doing so can trigger valuable policy benefits.

Read Full Article

Lender Assignment and Certification Requirements

Victor O. Schinnerrer & Co., Inc. 

When a client insists on assigning contractual rights to a lender that requires consent and certification of project information, most of the resulting issues are business-related and have little impact on professional liability risks. From a professional liability perspective, the concerns raised by an assignment center around whether the design professional is extending its liability through its statements to the lender and whether the instruments of service could be used in an unmanaged situation thus increasing the risk of merit less claims against the design professional. Also of concern is whether or not the assignment contains express warranty or guarantee language. Perhaps most important to the design professional, however, are practice management and legal issues such as whether or not it is comfortable with providing services to an unknown client and whether or not it will be properly compensated for services after a loan default. 

Read Full Article