What Does Architect Professional Liability (E&O) Insurance Cost?

Professional liability insurance can be a big line item for architecture firms of every size. You may also hear it called errors and omissions (E&O) insurance. Whatever you call it, one question always comes up:

What does architect insurance actually cost, and how do I avoid overpaying for weak coverage?

In this article, I will walk through:

• The two main types of professional liability policies architects buy
• Real world price examples from firms around the country
• Simple ways to reduce your premium
• How to tell if your carrier is a true specialist or just a generic insurer.

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Two Very Different Paths For Architect Professional Liability

When you shop for architect insurance, you usually end up going down one of two paths.

Path 1: Generic Professional Liability Policy

This is the most commonly offered path, especially if you buy online from an insurance company that advertises cheap without advertising what they specifically offer architects. This is a generalist carrier with a generic coverage form not build specifically for architects.

What this typically looks like:

• The same generic professional liability policy that marketing firms, consultants, and all kinds of unrelated businesses use.
• Policy wording that is not designed around the realities of architecture
• Claims adjusters who do not really understand what design professionals do.

Sometimes these policies even look like they are built for architects. They may include architect sounding language, but undernearth the surface it is a one size fits all form that can leave serious gaps.

Our agency does not place architecture clients with these kinds of insurance companies. For some people, unreliable coverage for a lower price might feel tempting in the short term. In the long term, it can be a very expensive decision if you ever face a serious claim.

Path 2: Specialized Architect Professional Liability Carriers

The second path is to work with an insurance company that specializes in architects and engineers.

This is the route I recommend for all my architecture clients and the only style of policy I help them procure.

Specialized carriers usually:

• Are involved with associations like the American Institute of Architects (AIA)
• Use architect and engineer specific coverage forms
• Offer services designed just for design professionals, such as contract reviews and risk management resources
• Employ underwriting and claims teams that work with architects and engineers all day every day

That last point matters a lot. When you have a claim, you do not want to spend the entire phone call defining terms and explaining basic realities. If you get an amateur team defending you in a lawsuit, you will get amateur results.

Some examples of specialized carriers include:

• Berkley Design Professional
• AXA XL
• Hartford
• Beazley
• Travelers

One of our favorite carriers for architects is Berkley Design Professional. They are an insurance company specifically built around design professionals, so their reputation with architects is everything to them. That focus usually leads to better coverage, better claims handling, and less of a sense that you are just a policy number.

So What Does Architect Insurance Cost?

Let us talk numbers.

Below are real examples of annual premiums for architect professional liability policies (E&O) from specialty carriers that actually intend to pay claims. These examples are for firms with up to $1m dollars in annual revenue.

These are examples, not quotes, but they should give you a realistic range.

Sample Architect Professional Liability Pricing

Above $1,000,000 in revenue, pricing becomes much more specific to your operations, project mix, and risk profile. At that point, it is better to get a tailored quote than rely on examples.

Three Easy Ways To Reduce Your Architect Insurance Premium

Now let us talk about saving money without gutting your coverage.

Take A Risk Management Course

Many high quality architect insurers offer a 1-1.5 hour risk management course for architects. If your team completes one of these courses, carriers will often give you a 10-15% discount on your professional liability insurance.

Carriers love this because:

• It reduces the likelihood of claims
• It shows you are serious about managing risk

And frankly, these courses are not just check box tasks. They can provide genuinely useful tips to help you avoid lawsuits.

Add Limitation of Liability Clauses to Your Contracts ($250k or Less)

If you consistently use contracts with a limitation of liability clause that caps damages (for example, limiting claims to less than $250,000), carriers often reward that with a significant discount.In some cases, this can be up to 25% off your premium.

Benefits of limitation of liability clauses:

• They can reduce the severity of claims
• They are generally smart from a legal risk standpoint
• They signal to underwriters that you take contract risk management seriously

Talk with your attorney about building these clauses into your standard agreements.

Choose a Reasonable Deductible

It is often possible to buy a policy with no deductible, but that can be more expensive than it needs to be.

Many architects find that a deductible in the range of 0.5-3% of annual revenue strikes a good balance between risk and savings. For example, a firm with $500k in revenue might consider a deductible between $2,500 and $15,000.

Why carriers discount for deductibles:

• If you have some skin in the game, carriers assume you are more diligent about managing risk and avoiding small, preventable claims.
• A deductible reduces the about the insurance company has to pay in a claim, so the premium reduces due to the lowered exposure to the insurance company.

The result is often a meaningful premium reduction.

How To Tell If Your Insurance Carrier Is A Good Partner

Price matters, but for professional liability, the quality of your insurer is just as important.

Here are some questions to help you determine whether you are with a generic insurer or a specialist.

Do They Offer Architect Specific Coverages and Services?

Ask your agent or carrier:

• Do you offer project specific excess or client specific excess for architects?
• Do you have an in-house claims team that focuses on architects and engineers?
• Do you provide risk management service specifically to architect clients?

Many specialist insurers offer these features. Most generic insurance providers do not.

Are They Involved With Design Professional Association?

Quality specialty carriers are often:

• Teaching AIA or ACEC classes
• Hosting webinars for architects on emerging risks
• Producing resources targeted at design professionals

If they are investing time and reputation in your community, that usually means they care about long term relationships, not quick premium dollars.

Final Thoughts And Next Steps

Architects usually have better insurance options that many other industries. There are several insurers that truly understand design professionals and build products specifically to you.

Because of that, there is very little reason today for an architect to be stuck with a weak, generic professional liability policy from a carrier that does not know the profession.

If you want help, reach out to me and my team at LandesBlosch. We are happy to walk through your options and help you find an insurer you can trust.