ASCE Member Insurance Blog

Jurisdictions Where the Economic Loss Doctrine Bars Extra-Contractual Claims Highlight the Importance of Well-Drafted Contracts

Posted on 6/15/2017 by ASCE Insurance in civil engineering civil engineer jurisdictions extra-contractual claims

By Sarah A. Johnson, Esq.

The economic loss doctrine is the legal principle that economic loss may not be recovered under a negligence or tort theory.1 “Economic loss” has been defined as damages for inadequate value, cost of repair and replacement of a defective product, or the consequent loss of profits, as well as the loss of value of the product due to its inferior quality.2 The theory behind this doctrine is that a purchaser’s wish to reap the benefits of his bargain is not an interest protected by tort law.3 Rather, the remedy for economic loss relating to the purchaser’s disappointed expectations properly lies in contract.4

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Claims Retrospective: Subrogation Demystified

Posted on 6/15/2017 by ASCE Insurance in civil engineering engineers insurance subrogation

Meticulous Engineer was hired to do the calculations for the demolition plans in connection with the renovation of Old Warehouse. The drawings indicated that part of Old Warehouse was to be demolished and a small addition was to be added to the remaining part of Old Warehouse. Unfortunately, Destroy Contractors, the demolition contractor, did not follow the demolition plans, causing a collapse to part of Old Warehouse that was intended to be restored and reused.

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Engineers’ Duties Outside of a Written Contract: Avoiding Pitfalls Through Proper Documentation

Posted on 3/9/2017 by ASCE Insurance in Liability Contracts Legal Documentation

As with any profession, a contract for engineering services specifies the terms of agreements, services to be exchanged, deadlines, and estimated costs. It also outlines the specific duties of the project's engineering firm.1 However, as a project progresses, its scope—and thus the engineering firm's duties—can expand. As an engineer, it's important to be aware that taking on duties outside those outlined in your contract may increase your liability.2 To understand how, consider the real-life scenario described below.

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Claim Retrospective: Clients’ Unauthorized Use of Plans and Drawings or Seal and Stamp

Posted on 3/9/2017 by ASCE Insurance in Claims Liability Legal Clients Plans

Unfortunately, clients commonly use engineers' plans and drawings on subsequent projects without the engineer's permission. Even worse, clients have altered engineers’ plans and drawings before using them in subsequent projects, again without the engineer's approval. Shockingly, clients have even used an engineer's seal and stamp without their authorization.

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Construction Observation Duties Do Not Make an Engineer Responsible for On-Site Safety

Posted on 10/6/2016 by ASCE Insurance in Liability Legal Duties

It is common for engineers to be named as defendants in lawsuits by construction workers who are injured while working at the construction site. Often, an injured worker’s attorney will name everyone involved in the project and determine who is liable later, or even worse, invent a reason why a party might be liable. As in most circumstances, the engineer’s contract and/or conduct will determine the duties of the engineer and, thus, whether the engineer can possibly have any liability for an on-site construction accident.1

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Claim Retrospective: The Significance of a Global Settlement in Multi-Party Litigation

Posted on 10/6/2016 by ASCE Insurance in Claims Contracts Legal

Why can’t we settle the claim? The answer is often that we cannot obtain a global settlement. Unfortunately, such an answer is not always easy for engineers to understand. As you might imagine, the more parties involved in the litigation, the more difficult it can be to get everyone to agree on a resolution.

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What’s an indemnification provision?

Posted on 6/9/2016 by ASCE Insurance

Next time you sign a contract, look closely for language requiring either you or your client to “indemnify” and/or “hold harmless” from claims by third parties. This type of provision is commonly referred to as an indemnity provision. In general, it requires one party to reimburse the other for losses and/or damages incurred as a result of a claim against that other party. While many contracts contain such provisions, it is important to understand that state law often limits their reach and enforceability. Consequently, whether it is you or your client who has requested an indemnity provision, it is advisable that you check with your legal counsel to verify that the provision is valid under your state’s specific laws.

By Douglas R. Garmager, Esq.

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Know Your Limits — The Consequences of Being Underinsured

Posted on 6/9/2016 by ASCE Insurance in Claims Liability Coverage

Most professionals, including engineers, understand that claims are one of the inevitable costs of doing business. Engineers buy professional liability insurance to ensure that the cost of defense, settlement, and/or liability associated with a claim will not fall predominately on their shoulders.

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Know the Limits of Your Contract

Posted on 4/15/2016 by ASCE Insurance in Construction Contracts Legal

General contractors and developers rarely have insurance covering construction defect claims, and they regularly become insolvent and/or judgment proof after a project is completed. Because of this, homebuyers often attempt to expand the duties of design professionals beyond those imposed by common law or agreed to in a contract. Illinois homebuyers recently attempted to expand the duties and attendant liability of design professionals by arguing the doctrine of implied warranty of habitability applies to design professionals.

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Effective Ways to Handle Claims

Posted on 4/15/2016 by ASCE Insurance in Claims Liability Reporting

When claims surface during an ongoing project, engineers are often under pressure to act quickly in order to prevent further damages. However, acting too hastily may jeopardize their insurance coverage. It’s imperative for the engineer to report claims to their professional liability insurance carrier immediately.

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