Why Would I Be Sued?

A claim is an oral or written demand for services or monies which can be based upon a design error, loss of use or loss of income, increased project costs, injury or death to a person residing in or using the facility, significant change orders and contractor related problems, among other things.

Providing a perfectly designed project will not always protect you from

claims or lawsuits. You are always dealing with the human element, state law, and contracts that require you to assume liability that is not in proportion to your actual services or income.

kraft-insurance-brokerage-frustratedAs you probably know, the statute of limitations in California is 10 years for latent defects and 6 years for patent defects. The count-down starts when the project reaches substantial completion. There is no statute of limitations for claims arising from injury or death to persons.

We recently had a client sued by an individual who had designed a public building which was 50 years old – it was a perfect project until this individual fell and was permanently disabled. The architect’s share of the settlement was $250,000 which did not include legal costs.

Many design professionals feel that if they are a corporation their personal assets are protected.  It would be nice if this were true but designs are stamped by individuals not corporations; therefore all of your assets excluding your retirement accounts can be at risk.

The design professional most likely to be sued first is the architect as he/she is most likely to hold the prime contract and have vicarious liability for the engineering consultants. Liability is a ‘hot potato’ which is passed from owner or general contractor to the design professionals and frequently from the architect to the engineers through indemnification agreements. Always be on the look-out for “sole” negligence, active or passive, and direct and indirect language in your indemnification clauses.

In today’s legal environment clients want the design professional to assume their liability and that of their agents for items they provide for your use including, geological reports, surveys, as-built drawings, and a multitude of studies, which if not accurate, could cause your designs to be in error.

As we all know, clients have ideas which they may force you to incorporate into your designs against your better judgment. A recent claim occurred when an owner required an outside elevator to face the side of a building which was always inundated by storms. The engineer recommended that the elevator be placed in another location. The client refused to listen to this advice and the elevator shaft flooded resulting in a lawsuit against the engineer and general contractor.

An insurance policy not only provides you, your firm, and your employees with financial protection, but it also provides you with access to on-going education, reference materials, pre-claims assistance, and most importantly assistance with the review and management of your contracts and the ramifications of indemnity and liability exposures.

*If you are aware of a potential claim, please refer to the claims reporting procedures in your policy, or contact us immediately.*