Small Project Design

I have a colleague who designs and builds small timber frame homes. He's in the process of getting his architectural license through NCARB. As a builder, he carries General Liability insurance. But apparently as a designer,he can't get Errors and Omissions insurance. I thought it might be because he is not yet licensed, but he said it was due to the building aspect. On the E&O insurance forms there is a check box for 'Do you build?' which seems to be a no-go for insurance. How do other small design-build firms manage design risk?

I had for many years provided design and construction services in California and managed to get around this by having two completely separate business entities. This did seem to work about six years ago but since we stop building I do see that on E&O applications they ask it the Architect has any connections to any other entity that builds.

Seems to me that as with most insurances now threy always seem to find ways to not cover things but still collect very large fees.


















y as a designer,he can't get Errors and Omissions insurance. I thought it might be because he is not yet licensed, but he said it was due to the building aspect. On the E&O insurance forms there is a check box for 'Do you build?' which seems to be a no-go for insurance. How do other small design-build firms manage design risk?

we do some limited construction management where we serve as the general contractor at risk.  our insurance, professional liability, covers us.  some companies won't, some will.  we've had insurance under two that have.  it used to be argued by some in the insurance industry that it is actually safer, since this delivery method avoids potential contractor vs. architect disputes.

you need to have your agent approach several different insurers.  traveller's, cna, and beazely have all given us quotes in the past.

-------------------------------------------
Glenn Richters AIA
Benefield Richters
Knoxville TN
-------------------------------------------

In my experience in a design build firm there are very few insurance companies that provide us with coverage. My insurance broker found a policy with Lloyd's of London which I have maintained for many years. And of course it is more expensive than a policy that does not cover the design build process.

-------------------------------------------
Craig Cernek AIA
The Archi/Build Group
Chicago IL
-------------------------------------------

We are in a similar position and are discussing with our broker the idea of creating two separate business entities; one that will be the design and the other the build.  Each company have their own respective contracts with the client and work together on a D+B project through a bridging contract.  This way the architectural side carries E&O and the build carries Liability. 

I believe this will also further insulate the partners from any liability.

I would also like to hear how others approach this problem.

Best,
Patrick

-------------------------------------------
Patrick Allen Assoc. AIA
Principal
Gabor + Allen (Design Build Landscape)
Venice CA
-------------------------------------------

There was a great talk on this matter at last SF AIA convention.
Basic message I came away with, create two independent business entities.
-------------------------------------------
Michael Boudreau AIA
Michael T. Boudreau, Architect
San Luis Obispo CA
-------------------------------------------