- Darren Taylor, Director of Flint Insurance, UK
- Lee James Appleton, Business Development Executive at Jelf, UK
- Michael George, President of AMJ Insurance, U.S.
What is professional liability insurance?
Darren Taylor: Professional liability insurance is a product designed for professional people and companies that covers legal costs and expenses incurred in your [legal] defense, as well as any damages or costs that may be awarded if you are alleged to have provided inadequate advice, services, or designs — or faulty products that cause your client to lose money.
Lee James Appleton: Professional liability (or “indemnity” in the UK) insurance covers CEDIA members who provide advice or a service to their customers. This insurance protects against the legal costs and claims for damages, which may arise out of an act, omission, or breach of professional duty.
Michael George: To Lee’s point, this insurance is also known as “Errors and Omissions” (or E and O) in the United States.
What is covered under liability insurance?
Darren Taylor: This covers legal costs and expenses incurred in your defense, as well as damages or costs that may be awarded if you are alleged to have provided inadequate advice, services, or designs that cause your client to suffer a financial loss.
Lee James Appleton: One of the main areas of relevance to CEDIA members is negligence or, in other words, being careless in your work — such as giving bad advice or making a mistake.
Why should integrators have liability insurance?
Darren Taylor: As an integrator, you are not required to have this insurance. However, without it, you could be liable for thousands of dollars in legal fees and compensation payments — not to mention lost income from the time spent defending any allegation.
You are likely to need professional liability insurance if:
- You provide advice or professional services to your clients (including consulting or contracting),
- You provide designs to your clients,
- You want to protect against allegations of mistakes or negligence in work that you have undertaken for your client, or,
- You work as a contractor, consultant, freelancer, or self-employed professional, and your client has requested that you arrange professional liability insurance in order to undertake a contract.
Lee James Appleton: Striving for first-class service is business as usual for CEDIA members, but mistakes can happen. An insurance policy of this type is designed to protect against the cost of dealing with a claim from a dissatisfied customer. Whether that’s due to a project overrunning or strategic advice that ends up losing the client money, it’s important to ensure that the cover is in place should an error occur.
Michael George: It’s an important safeguard, especially for systems designers. We’ve seen suits over the “diminishment of a client’s quality of life” due to a poor system! We’re also seeing more and more home builders insist that subcontractors — or anyone else on a jobsite — carry this kind of insurance so that they’re not held liable for someone else’s shortcomings.
General liability insurance protects your business from a claim for third-party injury or damage to their property as a direct result of any physical work you undertake.
What is the difference between professional liability insurance and general liability?
Darren Taylor: General liability insurance protects your business from a claim for third-party injury or damage to their property as a direct result of any physical work you undertake. Professional liability protects a business or individuals from financial losses from your professional services when providing design, advice, or a service for a fee.
Lee James Appleton: Professional liability and general liability are two different types of insurance. Quite simply, general liability insurance protects the policyholder in the event that they are sued for damages by a member of the public (including clients) arising out of bodily injury and/or property damage incurred as a result of their work.
What service or package is offered to CEDIA members?
Michael George: AMJ has a package provided by the firm Hiscox that provides customized coverage for your specific business. There’s even an option for coverage on work that was done before you signed up for the plan. The plan covers work by every member of your team that works on a project, including temps and subcontractors.
How much coverage do integrators need?
Darren Taylor: Each company or individual’s insurance requirements will vary; an integrator working in a residential environment will need different coverage from those working in commercial or retail, and a company with contracts that are large and complex will require different coverage and limits from a company working on smaller, simpler contracts.
Lee James Appleton: CEDIA members should consider the risks their business could potentially face and the maximum amount they need to pay out in legal fees and compensation in a worst-case scenario.
What information do integrators need to have to get liability insurance?
Darren Taylor: Insurers calculate your insurance premium based on a number of factors, but the key information would be turnover, contract sizes, number of contracts, type of work undertaken, and location the work is undertaken in.
Michael George: Factors change from firm to firm; a few minutes of conversation with us is really all it takes. It’s a fairly simple process.
What does this level of insurance cost?
Michael George: Generally, that’s based on a firm’s sales and other factors, but it’s not terribly pricey; rates start at around $270 per year. Call us at 888.258.6820 (ext. 172) or email me at firstname.lastname@example.org.