Effective Ways to Handle Claims
When claims surface during an ongoing project, engineers are often under pressure to act quickly in order to prevent further damages. However, acting too hastily may jeopardize their insurance coverage. It’s imperative for the engineer to report claims to their professional liability insurance carrier immediately.
Most professional liability insurance policies, including the ones underwritten by the ASCE program, contain clauses prohibiting an insured from admitting liability, settling any claim, or incurring any claim expenses, without the insurer’s written consent. These clauses also state the insured must take reasonable action to prevent or mitigate any claim which might be covered under the professional liability insurance policy. Thus, when engineers face claims during an ongoing project, they are often uncertain how to proceed. They do not wish to jeopardize their coverage, but also want to mitigate consequential damages that may occur if they fail to act promptly.
In most circumstances, the engineer can collect information and continue providing services without admitting liability.
The engineer should report claims made during an ongoing project to their professional liability insurance carrier immediately, and provide any important upcoming deadlines on the project. The engineer should not wait for instructions from their carrier before collecting information or providing other services on the project. In most circumstances, the engineer can collect information and continue providing services without admitting liability. While the engineer shouldn’t admit liability or agree to any settlement, they should remain in contact with the parties involved to offer what assistance they can.
In the rare instance that the engineer needs to make recommendations that would amount to an admission of liability, they should always notify their professional liability insurance carrier prior to doing so to help avoid further damages. In addition, the engineer should not agree to any settlement, as their professional liability insurance carrier may not be bound by any settlement made without their consent. Most parties in construction projects should be aware that design professionals cannot agree to a settlement without their insurers’ consent.
In these situations, most insurance carriers will want to work with their insured to resolve the matter as quickly and efficiently as possible. The carriers will likely be responsive and assist the insured with any investigation that might be necessary, as working together can lead to significant savings for both parties, and may also prevent the carrier from paying consequential damages. Some carriers have special benefits set up for their insureds for these exact situations. ASCE, for example, has a Risk Management Hotline (855.955.2723) which allows insureds to immediately contact knowledgeable attorneys during business hours. This benefit provides insureds with up to two free hours per policy period of legal advice and support.
The carrier will require a release from the claimant, which should protect the insured from future claims. Many professional liability insurance policies, including the ones underwritten by the ASCE, include incentives for the early resolution of claims in the form of a deductible reduction.
