Company insurance is intended to safeguard the financial assets of a business owner and is a necessary investment for an architectural firm.
This article will discuss the primary insurance coverage for architectural companies, general liability insurance, as well as additional policies that are appropriate for this industry.
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Architecture Firms Need General Liability Insurance
Every firm, regardless of sector, has risks that should be insured. General liability insurance is the most frequent and comprehensive form of coverage that company owners purchase.
General liability insurance covers the following risks:
Physical harm
Damage to property
Medical expenses
Legal defence and decision
Personal and commercial harm
While general liability insurance is not legally needed for companies, operating without it is exceedingly dangerous. If your company is sued, you might face costs in the hundreds of thousands of dollars (or more). The only way to avoid this sort of catastrophe from destroying your organisation is to have an adequate general liability insurance coverage in place to assist pay for these losses.
GENERAL LIABILITY INSURANCE MAY COVER COMMON SITUATIONS FOR AN ARCHITECTURE FIRM
Example 1: A customer visits your office and stumbles on a damp floor near the lavatory, breaking his arm. Because your employee failed to post a “wet floor” notice, the customer asks that your company pay for his medical treatment. The client’s medical care would be covered by general liability insurance.
Example 2: While visiting a client’s house to discuss a new office building design, you trip over her cat and fall into her enormous television, smashing your hand through the screen. The expense of repairing the client’s damaged property would be covered by general liability insurance.
Example 3: A rival accuses you of stealing his logo design and plans to sue your company. Even if you disagree with the charge, you must promptly find a counsel. Your general liability coverage will cover the cost of your legal counsel as well as any awarded settlement.
Of course, this is not an entire list of risks covered by a general liability insurance policy, and certain situations may result in a specific peril not being covered. To minimise coverage gaps, it’s always better to speak with your agent about the terms of your policy.
General Liability Insurance Cost
In the United States, architectural companies pay between $500 and $1,500 per year for $1 million in general liability coverage.
The cost of your coverage will be determined by a number of variables. Among them are your:
Location
Deductible
Employees’ number
Per-occurrence restriction
The overall aggregate limit
You may be able to get general liability insurance at a lower cost if you buy it as part of a business owner’s policy (BOP) rather than as a separate policy. A business interruption policy (BOP) is a more complete option that covers numerous types of coverage, such as business interruption and property insurance.
Other Types of Coverage Required by Architecture Firms
While general liability insurance is the most crucial, there are various different types of coverage to be aware of. Other forms of insurance that all architectural businesses should have are as follows:
Insurance for Professional Liability
This insurance protects your company in the event that a customer accuses you of carelessness as a result of a mistake or failure to perform. Professional liability insurance would pay your legal bills and any needed compensation if a customer alleges your work caused them injury and sues your firm.
Insurance for Commercial Property
You made a significant investment in your company’s equipment and supplies. Commercial property insurance would cover the expense of repairing or replacing your business-related property in the case of a fire, theft, or natural catastrophe if you own the building in which you operate. This includes structural damage to your facility or grounds, as well as damage to the equipment and supplies stored there.
Coverage Options for Some Architecture Firms
In addition to the policies listed above, your architectural company may need other forms of coverage based on particular elements of your operations. Some of them may not apply to you, so be sure to ask your agent whether policies are appropriate for your company.
Insurance for Workers’ Compensation
Most states will require you to have workers’ compensation insurance for both part-time and full-time employees if you have any employees. This coverage covers your workers if they are hurt at work or get sick as a result of a workplace accident. It covers not just an employee’s medical expenditures and missed pay if they need time off to recuperate, but also any disability or death benefits resulting from a work-related accident.
Additional Security Measures for Your Company
Although investing in company insurance is simple (and necessary), it should not be your first line of defence. Yes, insurance will reimburse your company for cash losses incurred as a result of an occurrence, but it is much preferable to avoid losses altogether.
With this in mind, here are a few steps you can take to better secure your company:
Make use of legally binding contracts and other business agreements. (We provide free templates for several of the most often used legal forms.)
To safeguard your personal assets, form a limited liability company (LLC) or a corporation. (To discover how to incorporate an LLC or company in your state, see our step-by-step tutorials.)
Keep your company licences up to date.
Streamline the internal procedures of your company. This will eliminate unneeded variables from routine activities and establish a secure, consistent environment in which to do business.
If your company is an LLC, you should check into LLC insurance.