I find it absolutely amazing what some practitioners are willing to agree to in their zest to win jobs in a competitive marketplace. Unfortunately, in their desire to win bids, many Landscape Architects sign contracts containing specific clauses that extend certain coverages to their client. Since their professional liability (E & D) insurance company is not a party to the contract, the insurance companies have no obligation to provide the coverage the Landscape Architect has agreed to provide.

Look Carefully and Slowly

It is imperative to look for specific wording in the contracts you are signing. Watch out for the typical “you agree to indemnify and hold harmless XYZ municipality from all acts, whether negligent or otherwise...?EUR??,,????'?? Look carefully and slowly at such wording. ?EUR??,,????'??To indemnify?EUR??,,????'?? means to defend and/or insure the client. Since your insurance company will not cover your client, you may find yourself personally liable. When you agree to “hold harmless” you are effectively agreeing not to sue them even though the municipality may indeed have been negligent.

Contracts Are Not Cast in Stone

Contracts are not cast in stone, although some attorneys would like you to believe they are. Nothing could be further from the truth. I was involved in providing coverage for a large number of Landscape Architects in California, many of whom were bidding a job for a sizeable city. Since the city contract had language similar to that shown above, the bidders approached the city, en masse and explained that the insurance industry was refusing to name the city as an additional insured. Furthermore, the Landscape Architect bidders were unwilling to sign personally in lieu of the insurance company. The city was left with no choice but to strike the problem language from the contract in order to have the job bid and built. That’s exactly what happened.

Additional Insureds

The habit of naming other entities as additional insureds in insurance policies began as an off-shoot to the litigation explosion in the 1960s and 70s. During competitive market cycles, the insurance industry would gladly take on such exposures, often with little or no additional premium. Combining this reality with the “deep pocket theory” caused the insurance companies to defend others even though only remotely involved with a project. As claims poured in, the insurance companies began to learn such was not prudent business. The insurance industry still will provide such coverage under general liability, but you will find it nearly impossible to obtain under professional liability.

Don’t Be Afraid to Object

The thing to remember whenever bidding a job requiring a signed contract is to reduce the wording down to small, understandable portions. If you don’t understand what some portions mean, get help from a competent source of information. Don’t be afraid to object if a portion is unreasonable. You may, on occasion, have to even pass up a job if the client is unwilling to compromise. Remember, unless the profit on the job equals your professional liability deductible, you can afford to pass one by. Good luck!