New Policy Expands Definition of Insured

For more than 60 years, the Victor and CNA professional liability program has maintained a solid and stable base policy while introducing innovative expansions of coverage. Just as the design and construction industry has evolved, so has their policy. The CNA policy has now expanded the definition of the term insured in a significant way to address the needs of the changing A&E marketplace.

At its base, the professional liability policy provides coverage for current and former employees of the firm who in the scope of their duties perform professional services for the firm. The policy also provides coverage for the firm entity as well as the current and former owners who have responsibility for the firm. Recent expansions of coverage include allowing firms to hire a retired partner as a consultant for a specific client or project or providing coverage for any leased personnel. These expansions enabled firms to staff their practice and projects with the personnel best suited for the job. The CNA policy expanded the definition of the term insured in a significant way, highlighting the commitment of CNA to serve the needs of the changing A&E marketplace.

What is the change?

The CNA professional liability policy now provides coverage for contracted personnel under the direct control and supervision of the insured firm for the scope of duties the contracted personnel completes on behalf of the firm. The contracted personnel must be engaged in their individual capacity. Be aware that the coverage expands to those personnel whose income is reported on a 1099 form for federal income tax purposes. The CNA policy only provides coverage for the contracted personnel if they do not have professional liability coverage of their own. If they already have professional liability coverage, your CNA policy will provide excess coverage if the contracted personnel policy limits are exhausted.

Why change it?

In the past, firms that employed on-site staff as full-time employees undertook design projects. Developments in digital technology increasingly allow firms to expand the use of individually contracted labor on a project basis. This gives firms the flexibility to use the best resources for each project and does not necessarily bind a firm to use employees for project execution. One of the major impediments to this evolving need was that either contracted personnel had to procure their own insurance policies or you had to work with your broker and underwriter to have the contracted personnel added as an insured. We made this change to serve our client’s needs to use contracted personnel on a project basis and reduce the administrative time and cost of onboarding contracted personnel for your projects. In addition, this gives firms the ability to provide:

  • more effective responses to project proposals that require additional staffing;
  • maximum flexibility in acquiring the best talent; and
  • assistance with management of colleague costs and benefits.

How does it benefit my practice?

This change is designed to give the policyholder more peace of mind. For example, when you engage subconsultants, your professional liability policy provides coverage for contracted personnel. From a risk management perspective, it still makes sense to engage competent, experienced personnel. If, however, the subconsultants do not have professional liability coverage of their own, the CNA policy includes contracted individuals in the definition of insured. In addition, this new expansion of coverage can help firms with:

  • transformational projects, such as when a firm has an expansive project that requires specific or functional areas of needed specialization;
  • overburdened deadlines, such as when firms bring on workers to handle the rush of a particularly difficult project; and
  • special connections, such as when firms hire individuals due to their relationships or connections with a specific project or owner.

Victor and CNA continue to partner with firms to help grow your professional practice and the design and construction industry as a whole.

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. Detailed information about both these programs may be found on the AIA Trust website, TheAIATrust.com.

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