Those in the architecture community often equate risk with professional liability. Because of state licensing laws and the general legal treatment of professionals, liability in the performance of professional services is a significant risk. When failure to meet the standard of care for professional services harms a project stakeholder or results in injury to the user of a facility, liability is likely to follow. However, there are other significant exposures that are not within the scope of professional liability insurance coverage.
All architecture firms have significant exposures that are not within the scope of professional liability insurance coverage. All businesses need general liability insurance to protect themselves from claims and lawsuits brought by clients, vendors, visitors, or even employees. In addition to general liability insurance, any business needs property insurance coverage. A business owner’s policy—known in the insurance industry as a BOP—is a special combination of coverages designed for small and medium-sized businesses. A BOP bundles general liability insurance and property insurance into a single policy that offers premium savings over separate policies and minimizes the gaps that might occur with separate policies.
In this age of “gig” workers and work-from-home businesses, practitioners often ignore or misunderstand available insurance protections. A homeowner’s policy usually does not cover claims related to a business conducted in a residence. Under certain circumstances, to counter the exclusion in a homeowner’s policy for running a business from a residence, a low-cost rider or endorsement might be available to cover damage to business assets. However, if clients, employees, or vendors visit a home office, a homeowner’s policy is not likely to cover the general liability exposures they represent. Moreover, property coverage may not apply to costly equipment, valuable papers, confidentiality obligations, and other exposures associated with operating a professional practice.
Similarly, any professional’s or commercial entity’s office can have significant exposures that appropriate combinations of insurance products can cover. A BOP could be the easiest answer to what could be complicated exposures.
What a BOP Policy Covers
General liability coverage protects business owners against property damage to others, claims of bodily injury and any associated medical costs, and other perils such as copyright infringement, libel, or slander. For instance, while visiting a prospective client, you could accidentally damage the belongings of the prospect and may not want to cover the cost out of your assets. Alternatively, you might not be appropriately diligent in obtaining permissions to publish material on your website. Defending against a copyright infringement claim, a breach of confidentiality allegation, or an accusation that your reference to a person was defamatory could result in costly litigation. If you have an office, during a meeting a client could walk into a glass wall that is intentionally “invisible.” You might need a policy to defend your business or to pay the medical bills when you are found to be at fault.
Whether you are leasing office space, working from your home, or simply sharing a desk in a common workplace, all of the items you need to perform your services can be expensive to replace. The commercial property insurance coverage of a BOP can cover damage to your office, destruction of your computer equipment, damage to your valuable papers and digital data, and even provide business income interruption payments. A BOP policy also typically includes “crime insurance” that helps to protect your business from fraud, theft, and forgery.
BOP coverage is often expandable to allow a combination of coverages specific to your operations. In some situations, coverage options include:
- Attacks and damages to computer systems or electronic data, creating both direct damage and loss of business income;
- Use of vehicles you lease, hire, or borrow;
- Liability of wrongful acts arising from the employment process; and
- Unintended release of private customer data, including the payment of expenses such as notifying affected clients.
While it does not cover every type of risk, a business owner’s policy helps protect your business from unexpected expenses related to property damage, medical payments, and lawsuits. It can also help shield your business from events that could destroy your financial viability. Compared to professional liability insurance coverage, the protections provided by a BOP are inexpensive.
You should discuss your insurance needs in detail with a knowledgeable insurance agent or broker. To protect your professional practice and your assets, you need to explain your current and planned business operations so that whatever coverage you buy will be adequate. Your insurance advisor can explain what the policy covers, excludes, or simply does not provide and review your coverage periodically as your business evolves.
Victor and CNA work with the AIA Trust to offer AIA members quality risk management coverage through the AIA Trust Professional Liability Insurance Program, Business Owners Program, and Cyber Liability Insurance program to address the challenges that architects face today and in the future.