In today's legal landscape, inflation and a highly vigilant plaintiffs' bar have made liability claims increasingly challenging for the architects and engineers (A&E) insurance market. When it comes to A&E claims, litigation is nearly a given on public design projects. If there is a project where there is a claim for bodily injuries or catastrophic damages, plaintiffs' counsel will likely seek to impose liability on the project's architect or engineer.

Here are three current A&E claim trends that may impact independent insurance agents' A&E clients:

1) Highway construction and public places. Highway construction projects frequently have significant A&E claims that involve catastrophic bodily injury. The most severe cases involve fatalities or catastrophic injuries where architects and engineers may have minimal or, tangential involvement but are named as defendants in the litigation. Plaintiffs' attorneys often name all entities associated with the project in the lawsuit and refuse to release them until they contribute toward a settlement. The choice then becomes to settle or try the case.

These claims typically arise from accidents caused by driver errors at highway construction sites, and plaintiffs seek settlements that far exceed the liability limits of the primarily responsible parties. As a result, all parties connected to the project may face significant litigation costs and pressure to contribute to a global settlement.

Similarly, litigation involving public spaces can include the architects and engineers involved in designing a space. Consider this example: A driver accidentally accelerated and hit a teenage girl in a parking lot, leaving her a paraplegic. The design firm was alleged to be liable because its design did not include the installation of protective barriers to prevent such accidents.

In another case, the plaintiff alleged that the architect's improper landscape design of a shopping mall caused an obstruction in a motorcyclist's vision, leading to an accident that resulted in the motorcyclist's death. 

2) Surveying errors and project damages. Surveying errors can also cause significant challenges. Such mistakes made at the start of a project can lead to millions of dollars in costs if the mistakes go undetected until the construction is well underway. Construction and foundations may need to be entirely redone, adding substantial expenses to the project.

3) Runaway verdicts and contractual limitations. Runaway verdicts remain one of the most significant risks for A&E professionals. Jury awards can be unpredictable and sometimes far exceed the true value of the claims and damages. Plaintiffs' attorneys often leverage this concern by developing emotional narratives to pursue aggressive settlements from all parties involved.

In these cases, it doesn't seem to matter to the plaintiffs' lawyers whether A&E firms have remote liability and can defend themselves against what they're being accused of. The A&E firm is part of the design and construction of the project, so the plaintiffs' lawyers expect them to pitch in on a settlement or proceed to trial.

Contractual limitations of liability or waivers of consequential damages can be helpful in controlling damage claims. However, these provisions may not always protect firms from third-party injury claims or be enforceable due to state laws in various jurisdictions.

Risk Management Strategies for Architects and Engineers

Risk management remains essential—and negotiating a fair and equitable contract is the foundation, including a clear scope of services that defines what services the A&E firm will perform and identifies any specifically excluded services, as well as services that should be performed by others.

A&E professionals should establish a collaborative relationship with the contractor, but avoid becoming their work coordinator or otherwise go beyond their contracted scope of services. In project management, particularly during the construction phase, thorough documentation is essential to claims defense.

The future claims environment likely will become more challenging due to rising inflation, aggressive plaintiffs' attorneys, and the increasing trend toward high-value settlements. Although project contracts and insurance coverage offer essential protection, independent agents should encourage architects and engineers to remain vigilant with risk management and training to protect themselves from a volatile claims environment.

John McKinney is assistant vice president, senior claims examiner, at Berkley Alliance Managers, a Berkley Company. He is based in New York. Derek Steffen is assistant vice president, senior claims examiner, at Berkley Alliance Managers, a Berkley Company. He is based in Philadelphia.

The remarks in this piece are McKinney's and Steffen's and do not necessarily represent the views of Berkley Alliance Managers or W. R. Berkley Corporation.