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New Jersey Society of Professional Land Surveyors ConferenceFeb. 7, 2019
Risks and Exposure of the Professional Land Surveyor
Mark AmiraultPartner
LDIG/Klein Agency, LLC
Debbie ChristenProduction Underwriter
Professional Underwriters Associates(PUA)
Professional Underwriters Agency |
Speaker Bios
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Mark Amirault, Partner, LDIG / Klein Agency, LLC• Mark is responsible for providing insurance coverage and review to all facets of the
design community. Mark is a frequent presenter of continuing education sessions on insurance, risk management and business topics for land surveyors and civil engineers.
• In 1999 he received his BS from the Carroll School of Management at Boston College. Prior to joining the Klein Agency, Mark was a marketing representative responsible for completing RFPs for a large custodial bank and was then an insurance underwriter with a focus on small to mid-size contractors.
• Mark joined the Klein Agency in 2006, and after a year working at Klein’s headquarters in Maryland, he opened the Philadelphia office in 2007. Since 2018, Mark has been influential in developing member agencies for the Land Design Insurance Group (www.landdesigninsurance.com).
• Phone: (410) 527-0512; Email: [email protected]
Professional Underwriters Agency |
Speaker Bios
• PUA/NSM Debbie joined PUA in May 2017 as an underwriter for the A/E Professional Liability Program, Design/Build & Contractor’s Professional Liability programso My role includes working with current retail & wholesale brokers on the east coast & mid-west as well as developing
new broker business partnerso Underwriting new & renewal accounts of all sizeso Our Carrier Partners: Arch - A+XV AM Best Rating & Lloyds of London.
• Marquis Agency/NIP Group, Inc. -10 Years, Vice-President and Risk Manager for Architects & Engineers Professional Liability Division:o Debbie managed a renewal book of business for 100+ clients in the NJ, PA, NY regiono Risk Manager- developed & presented Risk Management workshops o Author of two articles published in National A/E publications
» Responding to RFP’s» What You Need to Know When Purchasing Professional Liability Insurance
o Liaison to AIA National, NJ Land Surveyors, Society of Design Administratorso Was honored by the NJ Land Surveyors in 2005 with Friend of the Society award.o Member of A/E ProNet; served on the Board in addition to several committees
• Thomas J. Sharp & Associates, Inc. 15 years, Vice President- A/E Professional Liabilityo Debbie successfully managed a renewal book of business for 200 clients in the NJ, PA, NY region.
Debra Christen, Production Underwriter, PUA / A Division of NSM Insurance Group
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Professional Underwriters Agency |
CLAIMS
• Bad contract language• Lack of coordination of services with other design
professionals on a project• Lack of oversight; internal & external• Poor Communication; internal & external• Over extending the firm & it’s employees due to too
many projects• Employees not performing• Mistakes in the field & in the office• Fee disputes• Client
Common Causes of Surveying Claims
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Professional Underwriters Agency |
CLAIMS
These policies should include:• How management expects company operations to
function• Who is responsible to implement these expectations (by
function or job title)• Staffing- both in terms of specific project needs & quality
control monitoring• Incorporation of basic Checking & Review Procedures• Peer Review Procedures- Internal & external
Quality Control Program/Key Program Elements
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Professional Underwriters Agency |
Claims
DefinitionProfessional Liability Insurance Carriers define a claim as:A DEMAND received by you, the insured, for money or services and which alleges WRONGFUL ACT.
What is a Claim?
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Professional Underwriters Agency |
Claims
Which of the following constitutes a claim?1. A civil summons naming your firm2. An invoice from your client advising you owe them
money due to your errors3. A letter from an attorney with a demand for services
to corrected due to your errors4. A termination letter from a client demanding
reimbursement of your fees
Quiz
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Professional Underwriters Agency |
Claims
A pro-active approach by the Professional Liability carriers in assisting you, the insured, in mitigating a situation from becoming a claim, thus reducing the amount of claims and indemnity payments.
What is Pre-Claim Assistance
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Professional Underwriters Agency |
Claims
Which of the following may be considered for Pre-Claim Assistance?1. Your firm receives a subpoena for your project file2. While performing services on a project site, you notice the
concrete slabs of a building are not in alignment3. There is a accident on jobsite and a construction worker is
seriously injured4. You receive a subpoena to testify at a deposition on behalf of
the Project Owner in dispute with a contractor5. You are asked by the Project Owner & their attorney to
participate in a conference call regarding issues on a project
Quiz
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Professional Underwriters Agency |
Claims
In all of these situations and especially if your firm is served with a subpoena to testify or release of project files- Don’t Panic Your 1st course of action is to assess the situation & email or call
your BROKER. Discuss the situation & advise you wish to report the matter to your PL carrier
The PL carrier my elect to hire an attorney to assist you in the event you need to appear at a deposition, request for your project file or partake in a conference call
The PL Carrier & the attorney are protecting your interests, as you never want the opposing attorney to get you to say or release any information that could implicate your firm
Pre-Claim Assistance
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Professional Underwriters Agency |
Claims
What are the advantages of early reporting?• Pre-claim assistance is “Free”• No charge to your deductible• It could keep your firm out of a CLAIMIt is also your DUTY under the terms of the PL policy to report a matter as soon as practical. This will avoid possible denial of coverage by a carrier
Pre-Claim Assistance/Potential Claim
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Professional Underwriters Agency |
Claims
Gather pertinent information including any information your employee(s) may have knowledge of.1. Date, time, name & location for the project/or claim2. Allegations- what are the allegations, if not served with a
formal suit. If served with a civil complaint/suit papers, review the complaint, start preparing a summary of services rendered and the facts as you see it
3. Gather a list of any other parties that may or could be involved4. Find the Contract5. Send information to your Broker/Insurance Carrier ASAP
What steps to take when faced with a Claim
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Professional Underwriters Agency |
Claims
• DO NOT SEND EMAILS REQUESTING INFORMATION FROM OUTSIDE PARTIES
• DO NOT DISCUSS ISSUES OR CONCERNS WITH OUTSIDE PARTIES• BE CAREFUL WITH INTERNAL COMMUNICATIONS- ALL EMAILS
PERTINENT TO THE CLAIM IS DISCOVERABLE• DO NOT AGREE TO ATTEND MEETINGS/CONFERENCE CALLS TO
RESOLVE THE SITUATION. IF ABSOLUTELY NEEDED, BE A SPONGE, DO NOT VOLUNTEER ANY INFORMATION
• DO NOT SIGN A JOINT DEFENSE OR SIMILAR AGREEMENT WITHOUT THE ADVICE OF DEFENSE COUNSEL & CLAIM ANALYST
What Not To Do
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Professional Underwriters Agency |
Claims
• DO NOT BLEND PROJECT RECORDS WITH CLAIM RELATED CORRESPONDENCE
• DO NOT DESTROY ANY EVIDENCE• DO NOT ADMIT RESPONSIBILITY OR LIABILITY TO ANYONE • DO NOT SIGN OR ACCEPT ANY RELEASES RELATED TO THE
SITUATION
What Not To Do- cont.
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Professional Underwriters Agency |
CLAIMS
• Boundary errors• Construction stakeout errors• Topographic errors- seems to be on the
rise• Fee Disputes- still a problemThey all cost money in time, defense & resolution
Type of Common Surveying Claims
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Professional Underwriters Agency |
Claims
Insured- Surveying firm in FloridaProject- Residential Subdivision Services- Construction Stakeout, Topo. & Boundary – 2015-16Claim – Data used for the subdivision was incorrect. The original survey was based upon 1929 datum for the topo. Map. The county advised the surveyor the datum must be dated no earlier than 1988. The surveyor made the corrections and sent the 1988 datum to the Civil Engineer. The CE used the datum from 1929, thus resulting in a 1 foot elevation error (1929 datum was 1 FT. lower than the 1988 datum) which resulted in the the Project Owner incurring costs of $350,000 to bring in extra fill for the property.
A Look at Recent Arch/PUA Claims – Case #1
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Professional Underwriters Agency |
Claims
The CE claims they never received the 1988 Datum. Defense counsel for the surveyors has proof the 1988 datum was sent to the CE prior to the commencement of construction.Insurance Company Reserve - $70,000 legal expenses- no indemnity reserve. Defense counsel seeking Summary Judgement dismissal.Premiums Paid by Surveying firm- $71,967 - 4 yrs. insured with the same carrier. Loss ratio 100%2018 renewal- Did the premium increase, decrease or remain flat?
Florida Claim- continued
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Professional Underwriters Agency |
Claims
Insured- Surveying Firm in FloridaProject- ResidentialServices- Construction Stakeout, Topo., BoundaryClaims- Firm has had 2 claims with Arch in 2018.1. Claim brought by the Builder due to alleged stakeout error
for a retaining wall- Claim settled for $11,000. 2. Claim brought by Project Owner- alleged error in topo.
survey. Claim settled for $33,521.Both claims settled without incurring legal expenses.
A Look at Recent Claims- Case #2
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Professional Underwriters Agency |
Claims
3. In addition to these 2 claims - the firm has incurred claims with the previous carrier with a current total reserve of $220,000. These claims are still open.The current loss ratio with Arch is 61.7%. With 4 claims on the books between 2016-18, this firm is not looking favorable.
2018 Renewal- Did the premium increase or did Arch decide to non-renew this account?
A Look at Recent Claims -Case # 2 Cont.
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Professional Underwriters Agency |
Claims
Insured - Land Surveying firm, NY/NJ areaProject - ResidentialServices – Boundary surveyClaim - Boundary dispute on a project under construction, alleged property line error, foundation of building needed to be moved.Claim Closed – $25k in legal expenses; $85k in indemnity- total claim $110,000.
2018 Renewal- Did PUA/Arch increase the premium or elect to non-renew?
A look at Recent Claims- Case #3
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Professional Underwriters Agency |
Claims
Insured- Land Surveying Firm in NYProjects- 3 – all residentialServices- boundary, topo.Claims:1. Alleged error in setting benchmarks for 2 foundations. Indemnity
reserve- $116k, defense expense reserve, 16k2. Alleged improper, incorrect property survey- boundary error.
Indemnity reserve $7500, defense expense reserve, $2500.3. Failure to identify a boundary line incursion on the survey.
Indemnity reserve $7500; defense expense reserve $25k; pd exp. of 5k.
A look at Recent Claims- Case # 4
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Professional Underwriters Agency |
Claims
All 3 claims were reported 2016-18 & have a total reserve of $163,500.The firm has been insured with PUA/Arch for 3 yrs. with a total premium of $15,643 paid into Arch prior to the 2018 renewal.
2018 Renewal- Did PUA/Arch increase the premium or elected to non-renew?
A look at Recent Claims - Case #4 - cont.
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Professional Underwriters Agency |
Claims
• BE AWARE• BE SMART• PRACTICE WHAT YOU PREACH• USE THE RESOURCES AVAILABLE TO YOU• HAVE A SOUND CONTRACT
All this leads to greater profits
How do we avoid?
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Professional Underwriters Agency |
Contracts: Land Surveyor’s Scope of Services
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Included services
Excluded services
Additional services
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Standard of Care
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Common Law – Negligence
Standard
• Responsible to your client to meet the standard of care for your profession
• Design professionals don’t manufacture products; projects are one-of-a-kind
Perfection is not
contemplated
• Those who sell services for guidance of others in their economic, financial and personal affairs are not liable in absence of negligence or intentional misconduct
Professional Underwriters Agency |
Standard of Care
LAND SURVEYOR and its employees, subsidiaries, independent
professional associates, subconsultants, and subcontractors will
exercise that degree of care and skill ordinarily practiced at the
same point in time and under similar circumstances by
professionals providing similar services. Client agrees that
services provided will be rendered without any warranty, express
or implied.
Sample Contract Language
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Professional Underwriters Agency |
Contractual Clauses
Outlines how the party who suffers damages (i.e. bodily injury, property damage, or economic loss) will be compensated or “held harmless” by the other party whose actions were the proximate cause of the loss.
• It’s OK to indemnify the Client for claims arising out of and to the extent caused by a finding of a Professional’s negligent acts, errors or omissions
• Avoid terms which require you to provide defense for your Client. Your insurance carriers are not obligated to honor this provision
• No use of dangerous terms and phrases such as “Warrant”, “Highest”, “Suitable”, “In Connection With”
• No assumption of damages arising from anyone else (other than own Subconsultants)
Indemnification
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Professional Underwriters Agency |
Contractual Clauses
To the fullest extent permitted by law, Consultant shall defend, indemnify and hold harmless Developer…against any and all claims… including the reasonable fees of attorneys, arising out of or in any way connected with any act or omission of Consultant…whether such claims, liens, demands, damages, losses or expenses are based upon…any other legal…theory whatsoever, and regardless of whether or not such claim…is caused in part by a party indemnified hereunder, including the partial negligence of any such party.
Bad Indemnity Clause
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Professional Underwriters Agency |
Contractual Clauses
To the fullest extent permitted by law, Consultant shall defend, indemnify and hold harmless Developer…against any and all claims… including the reasonable fees of attorneys, arising out of or in any way connected with any act or omission of Consultant…whether such claims, liens, demands, damages, losses or expenses are based upon…any other legal…theory whatsoever, and regardless of whether or not such claim…is caused in part by a party indemnified hereunder, including the partial negligence of any such party.
Bad Indemnity Clause
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Professional Underwriters Agency |
Contractual Clauses
• Financing sources are changing the project delivery methods
• What is the Land Surveyor’s responsibility when they are hired by another design firm?
• Has the Land Surveyor received/reviewed the Prime Agreement?
• Does the Prime Agreement supersede any other agreements?
• Are there any “paid when paid” provisions?
Beware the Flow Down
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Professional Underwriters Agency |
Contractual Clauses
“The Subconsultant further agrees to be bound by any modification of the Prime Agreement that may occur from time to time. The Consultant agrees to notify of all such changes on a timely basis.”
Dangerous Flow Down Language
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Professional Underwriters Agency |
Contractual Clauses
The following came directly from an ENR 500 firm hiring one of our engineering/surveying clients as a subconsultant:
“Subconsultant agrees to comply with and be subject to the same contractual requirements with respect to Consultant as the Consultant is subject to with respect to Client under the Prime Agreement…”
“A copy of the Prime Agreement is attached heretoand by reference made a part of this Subcontract Agreement”
Dangerous Flow Down Language
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Professional Underwriters Agency |
Contractual Clauses
Client shall pay LAND SURVEYOR pursuant to the rates and charges set forth in the Proposal. LAND SURVEYOR will submit monthly invoices to Client for services rendered and expenses incurred. If Client does not pay invoices within thirty (30) days of submission of invoice, LAND SURVEYOR may, upon written notice to the Client, withhold deliverables and/or suspend further work until payments are brought current. The Client agrees to indemnify and hold LAND SURVEYOR harmless from any claim or liability resulting from such suspension.
Payment Terms
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Professional Underwriters Agency |
Contractual Clauses
• In the absence of a professional standard for CA services, it must/should be defined by contract
• The contractual descriptions of scope should also include disclaimers
• Claim issues impacting CA serviceso Job Site Safetyo Faulty Workmanship / Product Issueso Schedulingo Coordination / Communication o Overbillings / Payment issues o RFI’s / Change Orders
Construction Phase Services
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Professional Underwriters Agency |
Contractual Clauses
Site Visitation:“In the event LAND SURVEYOR’S scope of services listed under Exhibit A shall include periodic site visits during the construction phases, LAND SURVEYOR shall be serving only in the capacity as a consultant to advise Client on issues involving progress and general design compliance. The LAND SURVEYOR does not assume any responsibility for the quality, sequences, techniques or timeliness of any contractor’s work, job site safety, continuous on-site inspections, or any issues that fall outside of the LAND SURVEYOR’S scope of services as defined in this Agreement”
Construction Phase Services
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Professional Underwriters Agency |
Contractual Clauses
Other Considerations:
• Trend of inexperience among CA providers and their staff
• If CA is provided by the prime engineer or architect, the experience and skill of prime’s CA staff can greatly impact you as the sub
• Be wary of lump sum fee for CA services. CA is the area where most design professionals underestimate their time
• “If it can’t be read, it wasn’t said” – Documentation (how and when) is key
Construction Phase Services
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Professional Underwriters Agency |
Contractual Clauses
• Set expectations up front – “we’re not perfect”
• Specifics that can lead to problems:o Designing out of sequenceo Fast-track scheduleo Unrealistic budget
• Keep talking to client, and help when a problem occurs• Identify the issues, and solve them quickly
Communicate and Document
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Professional Underwriters Agency |
Closing Thoughts• Unfortunately claims will happen, it is part of the business.
• A solid contract with appropriate terms and conditions will help deflect those claims
• Keep open communication between your staff and client
• Managing expectations is one key to a successful surveying firm
• Remember why you went into this business and don’t dwell on the negative
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