Source: Beazley, PRO Newsletter, Summer 2014
Facts:
Our insured, an engineering firm, was retained by a bridge designer to provide geotechnical engineering services in connection with a bridge project in Vermont. Our insured carried Environmental Media Tech Insurance – which addressed not only its contractor’s pollution liability, but also its professional liability exposure – all in one form. Fortunately so.
The project’s general contractor brought a professional liability claim against the designer, alleging that the project incurred cost overruns due to structural errors in the preliminary design. The general contractor estimated these costs to exceed $1 million. Our insured received notification of a claim from the designer, with an initial request that our insured pay $700,000 toward a remedy.
Discussion:
Beazley’s claims team requested a breakdown of the costs demanded by the claimant and collaborated with an outside expert to evaluate the appropriateness of the calculations and the cost breakdown. After meeting with the designer to discuss our findings, the designer reduced its demand to $225,000. The matter eventually settled for $130,000.
Lessons learned:
Always take the time to dissect a demand and understand in detail what is behind it. After analyzing the numbers, Beazley and our expert were able to provide a more accurate counter. In addition, our in-house experts reviewed the documents with the insured before engaging the third-party expert. The involvement of our own in-house experts saved money, eased and expedited the process, and at the end of the day, these collaborative efforts helped ensure the most on-target result.