Schinnerer's RM Blog - claim tag

Parking Garage Claims

Fri, 27 Apr 2012 12:21:00 GMT

From 2001 through 2010, claims in the Schinnerer and CNA professional liability program involving parking garages were most often brought against architects (42%), civil engineers (20%), and structural engineers (19%). The following is an example of a parking garage claim:

An architect entered into an oral agreement to provide architectural and engineering services for an office structure and garage. The architect retained a structural engineer as a subconsultant, and the structural engineer in turn retained a post-tension design subconsultant. During construction, a number of tendons placed within the poured concrete slabs were prematurely cut by the contractor. To repair the decreased ability to provide tension to the tendons, a coupler was secured to the end of the tensions and detensioning chair was used to draw the tendons taut during the tensioning process. During this process, one of the cables pulled free, instantly killing the worker in the detensioning chair. The architect only had vicarious liability for the subconsultants; there was no direct liability. Also, the architect did not have construction site responsibilities when the plaintiff was killed. The architect was able to obtain a dismissal of the claim brought by the employee’s family, but expenses totaled $92,000.

For more information including risk management advice, please see our entire parking garages claims study (access limited to current policyholders and brokers). This study was updated with current statistics in September, 2011.

Library Claims

Thu, 29 Mar 2012 11:51:00 GMT

Library project claims tend to be less severe than claims stemming from other project types. From 2001 through 2010, the highest frequency (55%) and severity (76%) for library claims involved delays and extras. The following is an example of a library claim:

An architect was hired by a university to design a new library with a construction value of $40 million. The university used an intensive value analysis process to reduce the construction contract to $38 million. The project experienced substantial delays and cost overruns that increased the project to an eventual cost of $48.5 million. The contractor filed a claim against the university for $3 million for delays and extra costs. The university negotiated directly with the contractor and then looked to the design team for $1.6 million, alleging that the plans contained numerous design errors, and that the design team failed to respond to RFIs and submittals in a timely fashion. The claim settled for $400,000, with the architect paying two-thirds and the mechanical/electrical subconsultant paying the remaining one-third. In addition the architect paid expenses of $39,000.

For more information including risk management advice, please see our entire library claims study (access limited to current policyholders and brokers only). This study was updated with current statistics in September 2011.

Officials Bring Manslaughter Charge Against Architect

Thu, 08 Mar 2012 12:51:00 GMT

Officials in Los Angeles have brought involuntary manslaughter charges against an architect for the installation and construction of fireplaces that did not meet building codes. According to press reports, the fireplaces were built of wood framing and lined on the bottom, sides, and top with combustible drywall that ordinarily is used for standard walls. A Los Angeles firefighter fighting the blaze was buried under debris when the ceiling collapsed; the firefighter died subsequently. It appears that the architect was responsible for both the design and construction of the residence. These charges of course have be to be proven in court; nevertheless it is a reminder that design professionals may face criminal charges when they egregiously fail to meet minimum standards and such failure results in the loss of human life.

Land/Site Development Claims

Thu, 16 Feb 2012 12:39:00 GMT

Land/site development claims can be risky for civil engineers and land surveyors. The average indemnity payment of a site development claim from 2001 to 2010 was more than $108,000. The following is an example of a site development claim:

A civil engineer provided design services for a residential subdivision. His responsibilities included grading and storm drain design, a parcel map, and design of surface improvements, including a parking area. The issue in this claim was a geo-grid retaining wall system that moved and cracked because of a deep-seated, ancient landslide below the wall. The civil engineer showed the horizontal and vertical location of the wall, but he did not design the wall, provide structural calculations, or stake the location of the wall.

The engineer who designed the wall settled for $900,000. Other parties also settled, resulting in a combined settlement of $3,775,000. Although the actual cost to repair the wall was estimated at only $1,600,000, the estimated cost to stabilize the landslide exceeded $9 million and the alleged economic damages were $24 million. The claim involving the civil engineer was settled in mediation for $500,000. Although the civil engineer believed he had done nothing wrong, had he gone to trial his exposure would have far exceeded his available insurance limits; expenses were $150,000.

For more information including risk management advice, please see our entire land/site development claims study (access limited to current policyholders and brokers only). This study was updated with current statistics in September 2011.

Schinnerer Releases New Iowa Claims Study

Tue, 14 Feb 2012 14:33:00 GMT

In our new claims study, we provide an analysis of claims against Iowa-based constructed-related professional service firms insured by the Schinnerer and CNA program. This study illustrates the cost and effort spent by firms in defending themselves against claims. In our analysis, we examined two major factors that affect the exposure of firms in Iowa, as well as in the rest of the U.S. The two factors are the length of time between the completion of services and the filing of a claim, and the percentage of claims that resulted in payment by the Schinnerer and CNA program on behalf of policyholders. Our study reveals the fact that most claims are meritless, yet drive up operating costs for design firms and insurance costs for insurers, which in turn drive up design costs to clients.

Access the claims study here. (Access is limited to policyholders only.)