Liability Insurance for Design Professionals: <i>Can't Live with It, Can't Live without It?</i>

Abstract

Professional liability insurance can be beneficial, as well as problematic. This article presents two hypothetical situations that demonstrate the problems typically created by a decision to procure, or not to procure professional liability insurance. The author maintains that the choice to buy or not buy insurance is both a personal and a business one. Almost all large firms today operate with professional liability insurance. But for the mid size and smaller firms, there are both pros and cons. The pros are that a firm's practice will not be limited by clients' requiring insurance coverage and the firm's principals may simply be able to rest easier knowing they're insured. Conversely, coverage is costly, it may not be cost effective or necessary for the type of practice in question, and coverage can sometimes act as a “lightening rod,” attracting claims and law suits. Finally, firms not purchasing insurance may want to establish a legal defense fund with the money saved.