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Coverage for the construction boom As the construction industry continues to rebound from recession, the number of architects and engineers who need insurance is growing at a rapid rate mainstay in construction industry forecasting and business planning, predicts that total US construction starts for 2016 will rise 6% to $712 billion, and that gains for residential building will be up 16%, while nonresidential building will be up 9%. Likewise, the design sector is growing in excess of 10%, according to Sandridge. “They are just now getting back to where they were in 2007. They have rebounded very well. They are growing today, and there are lots of new start-ups – and lots of opportunities for producers in this line.”
Who needs coverage and why?
ALMOST EVERYONE suffered during the Great Recession, but architects and engineers were hit harder than any other professional business sector. That’s because design professionals are heavily involved in the beginning of a construction project. When the recession hit, money for new projects (and business for architects and engineers) dried up. But over the past three years, architects and engineers have made a strong comeback, riding on the coattails of the rebounding economy and booming construction market. Construction and design are linked economically. “Both play critical roles in almost every project,” says Homer Sandridge,
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an underwriting director at Travelers who is responsible for the carrier’s professional liability program for architects and engineers. “You need both to get something done.” Yet the fates of the two do not mirror each other exactly, because the design team’s role comes much earlier in the process. “Picture a roller coaster with the design professional in the front car and the contractor in the back car,” Sandridge says. “While both may be impacted by changes in the economy, design firms are impacted earlier.” Today, that roller coaster is taking design professionals on an exciting and profitable ride. The 2016 Dodge Construction Outlook, a
Architects and engineers are the primary business classes within the sector. Within these two broad disciplines, there are specialty subsets – such as civil or structural engineers, landscape architects, or interior designers – that may or may not require a license. Architects and engineers are particularly at risk of having a sizable claim brought against them. The whole success of a construction project hinges on their ability to do their job in a precise and timely manner. “Regardless of how well they may plan for a project, the potential for mistakes in their performance of services is still very real, and if things go wrong, the sums involved in rectifying a mistake can be high,” Sandridge says. “Their financial security can depend on how well protected they are from a lawsuit or claim.” Anything that goes wrong on a building project can result in a professional liability claim for architects and engineers. “There may be a structural issue, there may
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