November 2007 Issue
Liability Issues
Program Offers Extra Degree of Protection
Editor’s Note: Engineers Canada supplied the following article to The PEGG to help members understand the Secondary Professional Liability Insurance Program. Engineers Canada is the national organization of the 12 provincial and territorial associations that regulate the practice of engineering in Canada and license the country’s more than 170,000 professional engineers.
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The descriptions of coverage contained in this article are meant for information
purposes only. The actual policy is the legal document that describes coverage
and is solely used for any determination of coverage.
For more background, visit www.apegga.org and click on Member Benefits under Fast Find.
The Secondary Professional Liability Insurance Program has now been in place for five years. During that time, much has been learned about the incidental professional liability needs of engineers and geoscientists.
Over its life so far, the program has provided legal protection to many professionals who have found themselves faced with legal actions for services that they had provided as professionals. The program has been a great success in providing engineers and geoscientists with protection from a variety of claims.
Its purpose is to provide professional liability insurance protection to
individual engineers and geoscientists in non-consulting occupations, for personal
liability arising out of the practice of engineering and geosciences. In many
cases, the program also provides coverage to past employees of consulting firms
who no longer have access to other professional liability insurance.
Specific examples of coverage to individual engineers and geoscientists include
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Protection for claims resulting from actions undertaken as an employee in an engineering or geoscientist position in a firm that does not provide stand-alone engineering or geoscientist professional services. Examples of firms employing such professionals are manufacturers, vendors, contractors and product suppliers.
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Protection for former employees of consulting firms that no longer carry insurance.
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Protection during retirement for past professional acts. This protection applies to consultants as well as those who worked in non-consulting positions provided no other insurance is available.
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Protection for gratuitous or incidental advice given to others outside of normal employment. Doing a favour for others can sometimes have dire consequences.
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Protection for small consulting jobs ($2,000 in fees per project to a maximum of $10,000 per year) undertaken outside of normal employment. This coverage also applies to engineers and geoscientists who have officially retired.
Claims against individuals are an unfortunate reality in our society, which expects — and rightly so — a high degree of professional conduct from all professionals. Claims arise from a number of factors. Some are technical, others are human issues such as communications.
A breakdown between client expectations and the services received will often result in claims.
Examples of claims defended by the program include
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A retired structural engineer sued for a building designed in the 1980s. The claim resulted from the collapse of a roof in another part of the building not designed by the engineer. The owner brought action against all project participants.
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An employee of a consulting firm no longer in business sued by a condo strata alleging mechanical deficiencies in building.
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An employee of a manufacturer of energy producing equipment (windmills, solar panels) sued by an industrial client alleging improper design of custom-designed equipment.
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A part owner of an installer of septic systems sued by a purchaser alleging faulty design.
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Engineer sued by building owner when a repaired retaining wall failed. The owner of a construction firm had provided advice on remediation required to repair the wall, after it had partially collapsed.
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An engineer sued after being present at friend’s house during the inspection of a home being sold. The seller, inspector and engineer were all sued when serious foundation problems were discovered after the purchase of the home by the buyer. The engineer was alleged to have provided an opinion at the time of the house inspection.
The program was put in place to provide protection for the individual engineer or geoscientist. There is no coverage for firms.
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Coverage for payment of damages caused by professional error tops out at $100,000 per claim or the total of all claims per year, per individual engineer or geoscientist. There is a maximum limit of $250,000 per project, regardless the number of professionals involved.
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In addition to damage payments, defence costs are covered with no limit, other than the overall policy limit of $20 million.
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The individual pays no deductible.
In many cases, claims received by engineers and geoscientists are groundless and frivolous, arising out of miscommunication and the frustration of plaintiffs. In other cases, consumers truly suffer damages. It costs very little to launch a legal action against another party in an effort to recover costs.
The program has been successful in defending engineers and geoscientists from actions across Canada since its inception in 2002.