The legislature has been debating residential construction liability measures for the last few years. The latest bill to tackle this issue is E2SHB 1393. The bill as amended in the Senate would effectively void architects’ professional liability insurance.
The AIA|WA asked Victor O Schinnerer & Company to analyze the bill. Schinnerer is one of the nation’s premier providers of professional liability insurance for architects and engineers. They found that several of the bill’s provisions would leave architects without insurance coverage.
Regarding warranties and guarantees Schinnerer states,
“Professional liability policies do not cover express warranties or guarantees. Any allegation of breach of warranty would neither be defended by a professional liability insurance policy nor could any party suffering a loss based on the allegation of breach of warranty ever recover damages under a professional liability insurance policy.”
Regarding the fraud exclusion from the statute of repose they state,
“In addition, the CNA Policy – and to my knowledge all similar professional liability insurance policies – exclude from coverage any allegation of fraud. Therefore, legislation that creates a cause of action against design firms based on fraud and allows that cause of action to exist beyond any statute of repose places that firm at risk in perpetuity for an uninsurable exposure.”
The letter goes on to state that this legislation would lead to the loss of insurance for architects and engineers:
“It is highly likely that if this legislation were enacted, many design firms providing residential design services in the State of Washington will find that insurers will be unable to provide coverage to defend them at an acceptable cost.”
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