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Professional Indemnity Insurance


alexg
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Hi Guys

 

I need your 'professional' advice on Professional Indemnity Insurance.

 

How many of you take this insurances and how much (roughly) do u usually spend for these kind of insurance?

Did any of you ever got 'sued' of what we are doing? I know that in professional terms, it is very much possible to be sued if your photomontage does not 100% match the finished building.

What I really need to know is how to decide how much value of cover is our work worth. Can't really compare our business to architect, can we? Then we 'll be overpaying our insurance. But from what I know, undervalue-ing insurance can be disastrous to your business.

 

We got more and more client insisting that we took PI insurance. This time the work is done and my client request PI Insurance detail before they commence with payment.

 

Comments anyone?

 

Regards

Alex G

3DesignArchitect

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I'd be interested to know if other have this type of insurance as well. I will say that that is a pretty sleazy tactic that your client has pulled, and makes me wonder if this is just a stall tactic. I think it was his responsibility to insist on that before the work commenced, not after. I hope you have not delivered the work to them yet.

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Jeff

 

It's more and more requesting this insurance issue, not just one client. That's why I am wondering how much of us have this type of insurance right now.

 

Works already delivered, as this is already a long time (repeat) customer.

 

I have heard from other clients of mine that somehow this is going to be common issue in the next year. Just want to be prepared for this.

I once faced a similar issue early this year, but managed to sneak it through the system because of my company's entity is only 'advised' to be insured by the dept of fair trading, not as compulsory issue.

 

One question is : If we provide a render, how likely am I going to get a lawsuit these days? All the other industry sector have faced this issue, what about arch viz?

 

AlxG

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My personal opinion is that it is quite hard for us to be successfully sued based on the accuracy of the work.

 

Having said that, I understand that big clients seems to have certain standard procedure, one of which could be insisting that any professional they deal with to have professional indemnity insurance.

 

The problem with us is that, we are not professional in the traditional sense, meaning that our scope of work, ethics and competency standards are not regulated by law unlike doctors, lawyers and architects.

 

I have no answer to the question but I believe this question is much related to where we are heading as a profession and industry as a whole.

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I think I would be tempted to stay clear of clients requesting that. I'm from a traditional illustration background, and this issue was dealt with by writing 'artist impression' at the bottom of each visual. I don't see why we can't do the same with digital. I think we would have to extend the disclaimer for photo-montages to say that they are acurate as far as possible based on the information supplied.

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Dibbers

Agreed on that, we also mentioned artist impression on every montage job and that solves most of the problem.

We also make sure that we have every conversation in written format, from data delays, deadline extensions, revisions, late responses etc just to be on the safe side.

 

But if the market (or your potential market) expect us to be insured, are we we ready for it? Insurance = huge expenses, and will definitely leads to uncompetitive rates.

 

Our profession is, I think, one of the most risky business of all. We sit in the end of the deadline and people expect much of us.

Late deliveries, quality, in-accuracy, mis-interpretation, all leads to a very costly consequences.

 

With all the 'legal loopholes' around, all it takes is one single 'lawsuit-happy' client and its all over. I mean, what is our fees compared to the project cost?

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In my contracts and quotes, I always state that it will be 'to the best of our abilities' so that if a client were to want to sue for something like photo accuracy, then it wouldn't fly. But I can't see how a judge would let anyone sue for that, 'photo accurate' or 'photo real' are an ambiguous terms.

 

I'd like to know about any other issues like this, though. I can see being sued for technical issues (animation/DVD/website doesn't work), but the most important is dealines. For example, let's say you were doing a HUGE project and were late, a client could potentially sue you for losing the deal (if, let's say, they needed to present it to the city for approval and you didn't provide the image(s) on time). Then that could potentailly be a liability WAAAY up there in numbers.

 

Anyone have thoughts about that?

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Fortunately we haven't experienced that, although there's some near-misses.

But we have one client did write a report blaming us for 'bad quality rendering' leading to their loss in competition. A report which is quickly dismissed by his directors.

 

Another client's client also argues that they have the right to all our max files, so they can render their own animation. We clearly stated in our contract that we only provide final animation file but he argues that it was his impression that final animation file includes all max files as well.

It ended after fellow renderer that he contacts confirms what our contract means.

After that, we always list the final product we will and will not provide in the proposal and contract.

 

Anyone in this forum ever apply for insurance? Really like to discuss the pros and cons and the policy fees.

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I discussed Indemnity Insurance with my agent about 3 years ago. He didn't know what to do with me. He had no category to put me in. After a protracted discussion, he decided there was no need.
Yeah I am almost positive that any insurance agency will want to just lump us in with the standard E&O Insurance offered to Architects. (And it's not cheap!) Here is why I am saying this. Two years ago I decided I should probably put a rider on my house insurance to cover all my software and hardware I use for CGA, about $30K-40 worth. I figured this would be a simple 2 min task and my fee increases. Well as soon as I told them I dealt with American clients and through the internet it was a huge deal, becuase they would not put a rider on for equipment only unless I had E&O. I spoke to almost every insurance agaency in Canada and none of them had a clause for "architectual illustartors" or "illustrator websites", so they had to do a special analysis and in the end only one company woudl write the policy. That was Lloyds of London, yes the ones who insure small countries I think! The premium was going to be something like $15K/year and that did not even include the fee to insure the equipment and software yet. At the 11th hour I found one company, who only by mistake offered to cover my equipment only for about $700/year.

 

Long story short, from my experience there is no insurance classification for what we do. As soon as you say you deal with Architects you are considered an Architect too. Trust me when I say be VERY careful what you say to an insurance broker when it comes to describing what we do, or they will write you the biggest policy they can.

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Thanks guys for your info

 

It is a confusing issue. I got headache just reading the form applications. It seems that for each country or profession we deal with, there's an additional clause, and increase in premium. Damn!$#@$

 

15K/year is waaaay too much, it's about the same here too. If you got yours for $700 then it's great!

 

As with my 'other' insurance, it is very tempting to 'lie' about the value insured, but here in Oz the insurance company is not that stupid. They have penalties if we get caught doing undervalue of assets / income, which will costs us double if any lawsuit / claims occurs.

 

So much for insurances

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How about if you tell them you are a graphic artist or commercial illustrator. Those fields are widely classified and closer to the actual product we produce. Also, there is no professional liability or life/safety associated with illustration like there is with architecture.

Oh believe me I tried. I made the mistake of saying the word "Architect" as clients and red flags went up.

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Yes, they do require us to fill in our clients type.

Also if you are dealing with overseas clients, premium goes even higher.

 

From my point of view we only need insurance for two things basicly

- to get projects from clients that require us to be insured

- to get ourselves covered if anything goes wrong

 

Maybe the better way just lie about every details, clients, and income to keep the premium as low as possible and put proper disclaimer on every correspondence to cover our own back.

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Has your client gone through ISO9000 ratification or similar recently? We had to ask all our suppliers for proof of PI, Public and Employers liability insurance for our records after putting it in place - it's basically a paper chain to cover your own arse and prove that you've covered all the angles if you get sued - major PIA!

Agree about careful wording of your PI application - I do a lot of CAD work for marine projects - any mention of the words "Naval" and "Marine" seem to cause meltdown and quotes increased by a factor of 10, using a general engineering CAD / "visualisation" definition keeps premiums at around £1100/year for £1M cover in the UK and Europe. "Visualisation" seems to cover what we do, without mentioning bogey words like "Architect" and gives a large enough remit to work under.....

From what I figure, there is a LOT of room for the PI company to squirm out of paying up, so the main benefit is being prepared for larger organisations if they ask for proof of PI.

Cheers

Deri

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