Chapter 15a Architects and Engineers

• Library: The Handbook on Additional Insureds (ABA) (2018 Ed.)

CHAPTER 15A Architects and Engineers

Lyndon F. Bittle

I. Architects and Engineers

Architects and engineers (A/Es) will typically carry professional liability or errors and omissions (E&O) insurance. This insurance provides coverage for damages arising from the A/E's negligent acts, errors or omissions from the negligent acts, and errors or omissions of those for whom the A/Es are legally liable.

A. Including Other Parties as Additional Insureds on E&O Policies

1. Additional Insureds Not Usually Permitted

An architectural or engineering firm's E&O policy will typically cover the firm's partners, principals, directors, stockholders, managers, and employees for errors or omissions occurring while such persons are acting in the scope of employment. One of the most common misunderstandings regarding architects' and engineers' E&O coverage relates to additional insureds. A construction project owner or other participant may contractually require that the A/E add them to the A/E's E&O policy as an additional insured. An A/E generally will not be able to comply because professional liability insurers usually will not allow such parties to be covered as additional insureds, for a number of reasons. First, the purpose of professional liability policies is to cover the insured firm for the acts of its employees or those otherwise under the direction and control of the design firm. To provide coverage to project owners or others as additional insureds could greatly expand liability exposure to include claims against the additional insured that are not in any way attributable to the negligent acts, errors, or omissions of the A/E firm or its employees. A second reason owners or construction participants cannot be added to an architect's or engineer's E&O policy is that an E&O policy is intended to provide coverage not for ordinary negligence, but for a professional's liability arising from the rendering or failure to render professional services. Each profession has its own standard of care and its own inherent risks. A person or entity not engaged in that profession, such as a construction project owner, does not face the exposures insured by the policy and will not benefit from its coverages. In addition, E&O policies typically include an "insured versus insured" exclusion that will bar coverage for losses arising from a suit by one insured against another. If a project owner or contractor became an insured under the A/E's E&O policy, any client claims against the...