Safety And Environmental Consultants Liability Coverage Underwriting Considerations

SAFETY AND ENVIRONMENTAL CONSULTANTS LIABILITY COVERAGE UNDERWRITING CONSIDERATIONS

(November 2022)

EVALUATE INSURANCE COMPANIES

Safety and Environmental Consultants Liability insurance is not standardized. Insurance companies that write this coverage develop unique coverage features for the markets they want to write. There are a limited number of insurance companies that write this specialty coverage. They have the knowledge, resources, and experience necessary to successfully insure this class of business. In most cases, the company insures only a specified sub-group within the broad category of safety and environmental consultants. Some examples are consultants that:

· Test water, air, or soil for contaminants

· Test noise levels

· Perform OSHA compliance audits, analysis, and make recommendations

· Analyze underground exposures and make recommendations for remediation

Each company’s underwriting guidelines must be examined carefully to be certain they are compatible with a given risk’s exposures. This is because there is no standard coverage form or policy. Therefore, it’s likely for there to be significant differences such as eligibility requirements, certain individual coverages, and the way premium is paid. Further, it is important to determine the insurance company’s level of market expertise. Some indicators are how long it has written business and the market niche(s) it writes.

EVALUATE COVERAGES

Each insurance company creates coverage features according to the market or niche it wants to write. As a result, there are significant differences and variations between the coverages that different companies provide. There are probably significant differences between companies in the terms and wording in the following:

Insuring Agreements
Exclusions
Conditions
Defense
Limits
Who is an Insured
That is considered a wrongful act
Supplemental Coverages
Optional Coverages

These differences mean that coverage form or policy comparisons must be thorough and complete. Premium should never be the sole determining factor.

EVALUATE LOSS EXPERIENCE

Loss history is important, regardless of the size of the risk. The type, frequency, and severity of claims the insured sustains must be evaluated carefully and thoroughly. The firm’s history is an important consideration, as well as the background, education, training, and experience of its owners, partners, supervisory staff, and employees. Data that the initial application for coverage provides gives the agent and insurance company a feel for the insured’s quality, integrity, knowledge, and experience.

This information helps the company determine if the risk is desirable, the features it should include, and issues it must address, such as the following:

Coverage options
Exclusions
Limits per claim, per occurrence, and aggregate
Deductible or self-insured retention
Availability or necessity of excess liability limits

EVALUATE LOSS PREVENTION

Effective risk management or loss control measures are essential so that safety and environmental consulting risks can minimize their exposure to legal liability claims. Doing so has the following benefits:

Improves the chance that a given safety and environmental consulting firm meets an insurance company’s eligibility requirements
May allow the insured to choose between companies that write this coverage
May reduce the premium the insured pays
Allows the insurance agency to spend less time handling losses and more time on its core operations

Safety and Environmental Consultants must establish guidelines and procedures to minimize their exposure to acts, errors, omissions, and other professional or legal liability claims. It is extremely important that the insured establish procedures and follow them. Documentation, recordkeeping, and keeping notes and correspondence are extremely important.

Many claims arise out of a firm’s personnel decisions. Thorough background checks on all employees who will have contact with the public should be required. This includes verifying education, criminal records, and psychological testing. If employment-related practices coverage is provided, loss control should examine the procedures and the way the risk makes and documents hiring, firing, and disciplinary decisions.

Safety and Environmental Consultants Liability coverage forms and policies may cover personal injury liability. However, the specific acts covered and excluded must be examined carefully. These risks should have procedures to deal with the public, especially including policies on how confidential information is kept and used. Training that each individual consultant receives should be documented.

Safety and Environmental Consultants should periodically review the way they adhere to their risk management guidelines. Willingness to try different strategies, correct weaknesses, and take advantage of the experiences of others strengthens the risk’s internal guidelines. Many insurance companies offer significant premium credits for effective risk management programs. Some maintain an ongoing risk management relationship with their safety and environmental consulting clients by offering them loss control seminars.