I have a question for the vibration consultants out there. We provide vibration, infrared, oil analysis, laser alignment and fan balancing services. We've been doing this for 18 years.

Our insurance company is now insisting we carry "professional liability" insurance in addition to our general liability insurance. The PL insurance is about 3 times the cost of general liability insurance.

Do you other consultants carry professional liability insurance?

Thank you for your response.
NE PA John

John,

I opted not to carry professional Liability insurance because I couldn't see the need. My first agent tried hard to get me to, but I could not see where it would be of benefit to me. As you stated though, it certainly would have benefitted him at 3X the cost (same ratio here).

Dave

This message has been edited. Last edited by: RRS_Dave,

Three parties involved here - you, your clients, and your insurance company. And it's the insurance company that's "insisting". Hmmmm.
Surely it should be either you, or your clients, who should be pushing this, if there's a real need.
Alternative: if any of your clients ask, or if you raise the subject yourself, just inform the client that you don't have professional liability, and have them agree / sign off on it.

I think that (at least for me) our status does not imply a professional certification of anything, rather just an opinion. Maybe if you are a Professional Engineer and certify something, then you have a genuine liability.

Also, since we never are wrong, why would we need insurance?

Added comment: It also costs about 3 times what liability insurance costs and the only one I have had suggest it was an insurance agent.

This message has been edited. Last edited by: Danny Harvey,

I have general liability and they just keep renewing it every year and have never suggested professional liability. As stated, if you don't advertise as registered, professional, or certified, this should not be an issue. If you do adertise as a "Level III Certified" (or similar), then I'm not so sure (perhaps a good reason not to be certifed). Or if you are set up as "Vibration Guru, P.A." (professional association) maybe you are implying you are a professional... not sure of the legal ramifications. The best thing is to consult a competent attorney.

Your clients (corporations) are unlikely to sue you for anything. Your liability insurance doesn't protect you from them suing you, it protects the client from being sued in case someone on their property (employees, vendors, visitors) is injured by your actions. If you put a huge trial weight on a fan, and it then self destructs, well they may in fact sue you (unlikely though), but they won't be suing you insurance company because they know that general liability does not cover this sort of thing.

The main thing is, be careful, follow all their safety rules, and be professional. Never give them a reason to come after you.

This is one of the many things us in-house guys don't have to sweat.

Some general info on E&O insurance fwiw:
http://sb.thehartford.com/learn_insurance/errors.asp
Why You Need Errors & Omissions Insurance
Regardless of what kind of business you own, customers can claim that something you did on their behalf was done incorrectly, and that this error cost them money or caused them harm in some way.

What Errors & Omissions Insurance Is
In the litigious world we live in today, many business owners protect themselves with errors and omissions insurance (E&O). This type of insurance may be appropriate for anyone who gives advice, makes educated recommendations, designs solutions or represents the needs of others, such as teachers, consultants, software developers, ad copywriters, Web page designers, placement services, telecommunication carriers or inspectors.

How Errors & Omissions Insurance Works
Although formalizing a contract with your clients can help limit your liability, the big expense in an errors and omissions claim is the legal defense needed to prove liability or innocence. Errors & Omissions policies are designed to cover many of these defense costs and ultimately the final judgment if the business owner does not win the case.

Dave, thanks, for your response. If you don't mind me asking, what insurance company covers you?

John

quote:

Originally posted by RRS_Dave:
John,

I opted not to carry professional Liabibility insurance because I couldn't see the need. My first agent tried hard to get me to, but I could not see where it would be of benefit to me. As you stated though, it certainly would have benefitted him at 3X the cost (same ratio here).

Dave

Westfield Insurance is the main policy writer.
I got quotes from three of them when I first started (hard to break the habit of getting three quotes before purchase ), these folks had the best coverage at the best deal for me. I think they are somewhat confused at what I do though. Hard to explain to them. They have fit me in a testing/calibration slot.

Dave

Dave

I fell for the professional insurance. They listed me as a professional engineer because there was no listing for R&M consultant or business consultant in these areas. However, no one seemed to want to provide business insurance unless I paid for the other coverage. PE insurance (I am not a PE), because I have my CMRP, cost me 20 times the business insurance, which already covers me for anything that I actually perform, including errors and ommissions (check your business policy closely).

I will be dropping it at the end of the year as there were no requests for it from my clients and it generates an overhead that comes directly out of my profit. Costs such as these delay the ability to hire additional professionals.

The problem, as I discovered as I continued to investigate the reason, is that insurance companies, just like your standard CPA or MBA, has no clue about what reliability and maintenance are.

Oh, mine is the Hartford.

Howard

Why do insurance agent ask "Do you use OEM to do your equipment overhauls?" when they are renewing the Company's insurance? Because of this kind of question, we have to engage the OEM to supply one personnel to "supervise the overhaul works by a contractor" every plant turnaround, even after the warranty period long gone. Is this a normal practice elsewhere? How to tackle this issue?

P/s A bit off topic maybe but after reading this post, the question crops up in my head.

josh - I hear you.

Insurers covering industrial losses have opinions about what kinds of practices they think are high risk and low risk. They sometimes try to force their opinions on you.

This message has been edited. Last edited by: electricpete,

How much liability insurance do you guys have?

5 Mil. Total. 3 Mil w/2 mil umbrella

Dave

Actually just to expand this a little more. Do you have problems getting liability insurance? I'm sure this was meant for the independent consultant small business group out there.

Joe,

There doesn't seem to be a problem getting the insurance, the problem is getting them to place you in a category that is somewhat close to the actual work you do (see motor doc post above).

No one but us seems to know what we do.

Dave

I've never had any problem getting liability insurance, although they do seem a little befuddled by what to call me. I do have clients that ask for additional liability limits above my normal policy, and although my contracts say that they will pay for any increase above and beyond the stated coverage limits it has always been so inexpensive to get a rider that I've never charged anyone. I have a disclaimer that says I am simply providing recommendations based on my best judgement, but that they follow these at their own risk...Accidents happen.It is important to carry enough insurance to protect anyone who could be hurt from suffering financial hardship in addition to any physical damage.

Regards,
Tim

If you work for yourself or you're a consultant, you need to incorporate your business (C, S, or LLC) and make sure you run your business as a business, not as simply a "sideline" or a sole proprietorship. And keep your business and personal accounting/money/accounts completely seperated. Otherwise, you are putting your personal assets at risk.