A Professional Tells Us How - October 2007

Adequate insurance is a condition of license for professionals and, although we all know the types of insurance we need, the ins-and-outs of buying insurance can be very confusing. Oomph asked Anthea Mumby to give us some tips on professional liability insurance - something that all professionals giving advice to the public must carry.

Oomph: What are some of the key factors you need to take into account when buying insurance?

Anthea Mumby: The first is to know your insurance broker and make sure he or she has experience in the area of professional liability or 'Errors and Ommissions' insurance as it is commonly known. This is 'specialty' insurance and you want to make sure you're dealing with a pro and not someone who does just one or two policies of this type in a year.

My other piece of advice is to take the application process seriously. People look at insurance applications as just another business form they have to fill in, instead of an important legal document they need to read and complete carefully.

It's important to read the policy thoroughly [yes, all that fine print!...] so you know exactly what is and isn't covered, how to report claims, how to cancel your insurance coverage, and other details. Pay special attention to policy exclusions, especially if you have an 'all risk' policy. By knowing exactly what is not covered, you can rest assured in the knowledge that you are insured against any other causes of loss.

Oomph: What are some mistakes people make in their applications?

Anthea: The worst is not making full disclosure, like for instance not 'fessing' up if you've got a potential problem on a project and you may be putting a claim through once you've procured coverage. With respect to design firms, you need to disclose if you work on a design/build basis, which is covered by special carriers, is more expensive and requires that you take special steps or specific project management procedures to help prevent mistakes and lawsuits.

Mistakes or omissions can come back to haunt you when a claim is turned down or coverage is denied because the insurance company only had partial or innacurate information. It's the applicant's responsibility to ensure that all information is correct and complete.

Oomph: What are other situations to watch out for?

Anthea: Our area of specialty is coverage of design professionals, so I'll focus on two areas which can lead to problems in this type of practice. The first is when designers hire a contractor and bills the contractors' services through their firm. This makes them liable for the contractors' performance and/or mistakes - which is something they have limited control over.

Another common mistake is to delay reporting a claim. The minute you realize that a claim is possible or imminent you should contact your insurance broker who will then contact the insurance company. Reporting a possible incident is unlikely to affect your coverage or your premiums and can in fact help manage a situation and keep it from getting worse.

For more information on Mumby Insurance Brokers Inc., visit their website at: www.mumby.com