CRIS - Misc Lines - Ch.3 - Professional
Liability Insurance in Construction
Section 3.1 - Professional Liability Insurance in Construction - answers...
The key differences between a general liability and a professional liability insurance
policy concern....? - answer covered damages, coverage trigger, and covered activities.
Professional liability policies, provide a much broader scope of coverage (covered
damages are not limited to bodily injury and property damage), but for only one general
cause. What is the cause? - answer the rendering of, or failure to render, the specified
type(s) of professional services.
Professional liability policies are not standardized, so the scope of coverage can vary
significantly from one form to the next. (T/F)? - answertrue
Professional liability policies are virtually always written with a _________________
coverage trigger. - answerclaims-made
Claims-Made Coverage Trigger = - answerthe policy in effect at the time a claim is
made must respond to the claim when it is made.
Occurrence coverage trigger = - answerresponds to a claim based on when the loss
causing the claim occurred rather than when the claim associated with the loss is made
against the insured.
Professional liability policies are nearly always utilized in design-build projects. What is
a design-build project? - answerone in which a single entity contracts to both design and
build the project. Both design firms and construction firms have begun to offer design-
build services, with each typically subcontracting out the part of the work that is not its
area of expertise. The designer and the builder thus work as a team on all phases of the
project to assure delivery of a quality, on-time facility or structure.
There are two primary types of professional liability insurance used in construction: what
are they? - answer- contractors professional liability insurance
- architects and engineers (A&E) liability insurance.
Section 3. 2 - Contractors Professional Liability Insurance - answer...
Contractors professional liability insurance applies to a contractor's professional liability
loss exposures that can range from _________________ to ___________________,
such as that found in a design-build project. - answer- incidental design work
, - full design responsibility
Direct versus Vicarious Liability:
Direct liability can be based on _________ fault or ________ fault. - answer1. active
fault
2. passive fault
Active fault = - answeraffirmatively acting or failing to act in a way that directly causes
an accident and resulting injury or damage
Passive Fault = - answerfailing to properly supervise a subcontractor or to discover that
a subcontractor is engaging in an unsafe or improper work practice
Vicarious liability = - answerthe liability of the principal (e.g., contractor) for the acts of
its agents, such as subcontractors or architects or engineers.
Activities that Generate a Professional Liability Exposure:
Six Questions - If the contractor's answer to any of the following questions is "yes," the
firm likely has at least an incidental (i.e., minimal, but nevertheless one that exists and
requires coverage) professional liability loss exposure. - answer1. Does the firm enter
into explicit design-build or construction management projects?
2. Does the firm perform services for a fee that involve no "hands on" construction
work?
3. If so, do these services involve skills or expertise that require special education,
degrees, or licenses?
4. Could failure to exercise the appropriate degree of skill and care cause harm to
others?
5. Does the firm have any licensed professionals—primarily architects or engineers—on
staff, or does it ever contract with such professionals for services?
6. Does the firm ever lend employees to others for a fee?
Contractors entering into design-build contracts generally need to procure professional
liability insurance to cover their design errors and omissions (E&O) exposure.
Although contractors acting as design-builders may require their design
subconsultant(s) to indemnify them for any liability incurred in connection with the
design work, it may be unwise to rely exclusively on a hold harmless provision for
protection.
Name 5 reasons Contractors should procure their own professional liability insurance. -
answer1. The hold harmless provision could be deemed unenforceable.
Liability Insurance in Construction
Section 3.1 - Professional Liability Insurance in Construction - answers...
The key differences between a general liability and a professional liability insurance
policy concern....? - answer covered damages, coverage trigger, and covered activities.
Professional liability policies, provide a much broader scope of coverage (covered
damages are not limited to bodily injury and property damage), but for only one general
cause. What is the cause? - answer the rendering of, or failure to render, the specified
type(s) of professional services.
Professional liability policies are not standardized, so the scope of coverage can vary
significantly from one form to the next. (T/F)? - answertrue
Professional liability policies are virtually always written with a _________________
coverage trigger. - answerclaims-made
Claims-Made Coverage Trigger = - answerthe policy in effect at the time a claim is
made must respond to the claim when it is made.
Occurrence coverage trigger = - answerresponds to a claim based on when the loss
causing the claim occurred rather than when the claim associated with the loss is made
against the insured.
Professional liability policies are nearly always utilized in design-build projects. What is
a design-build project? - answerone in which a single entity contracts to both design and
build the project. Both design firms and construction firms have begun to offer design-
build services, with each typically subcontracting out the part of the work that is not its
area of expertise. The designer and the builder thus work as a team on all phases of the
project to assure delivery of a quality, on-time facility or structure.
There are two primary types of professional liability insurance used in construction: what
are they? - answer- contractors professional liability insurance
- architects and engineers (A&E) liability insurance.
Section 3. 2 - Contractors Professional Liability Insurance - answer...
Contractors professional liability insurance applies to a contractor's professional liability
loss exposures that can range from _________________ to ___________________,
such as that found in a design-build project. - answer- incidental design work
, - full design responsibility
Direct versus Vicarious Liability:
Direct liability can be based on _________ fault or ________ fault. - answer1. active
fault
2. passive fault
Active fault = - answeraffirmatively acting or failing to act in a way that directly causes
an accident and resulting injury or damage
Passive Fault = - answerfailing to properly supervise a subcontractor or to discover that
a subcontractor is engaging in an unsafe or improper work practice
Vicarious liability = - answerthe liability of the principal (e.g., contractor) for the acts of
its agents, such as subcontractors or architects or engineers.
Activities that Generate a Professional Liability Exposure:
Six Questions - If the contractor's answer to any of the following questions is "yes," the
firm likely has at least an incidental (i.e., minimal, but nevertheless one that exists and
requires coverage) professional liability loss exposure. - answer1. Does the firm enter
into explicit design-build or construction management projects?
2. Does the firm perform services for a fee that involve no "hands on" construction
work?
3. If so, do these services involve skills or expertise that require special education,
degrees, or licenses?
4. Could failure to exercise the appropriate degree of skill and care cause harm to
others?
5. Does the firm have any licensed professionals—primarily architects or engineers—on
staff, or does it ever contract with such professionals for services?
6. Does the firm ever lend employees to others for a fee?
Contractors entering into design-build contracts generally need to procure professional
liability insurance to cover their design errors and omissions (E&O) exposure.
Although contractors acting as design-builders may require their design
subconsultant(s) to indemnify them for any liability incurred in connection with the
design work, it may be unwise to rely exclusively on a hold harmless provision for
protection.
Name 5 reasons Contractors should procure their own professional liability insurance. -
answer1. The hold harmless provision could be deemed unenforceable.
