ASCE Risk Management Resources

Claims Retrospective: Maintaining Proper Licensure

Posted on 12/14/2018 by ASCE Insurance in Claims

Not holding the proper licensure can cause complications for an engineer’s claims defense and professional liability coverage.

Most engineers believe they don't need to be reminded of the importance of maintaining the proper licensure for the work or services they are engaged in. However, it's surprising how often it's discovered that an engineer does not have the proper licensure to engage in the work or services at issue during a claim or ongoing litigation.

Usually, the issue arises in one of three scenarios. The first is when an engineer is licensed to perform the work at issue in multiple states, but accidentally allows his or her licensure in the pertinent state to expire. In other words, the engineer failed to renew his or her license in a timely manner.

The second scenario is when a licensed engineer performs new services that venture into areas requiring more specialized licensure, such as structural, civil, or electrical engineering, for which he or she is not licensed. The third scenario is when an engineer holds the proper licensure for some amount of time, but the law changes, requiring a different or more specialized license.

The latter two scenarios can be tricky because the licensure requirements for performing various services and activities are typically controlled by the state where the work is performed or implemented, not necessarily where an engineer is based. For example, if an engineer completes civil engineering plans for a construction project in state X, then the law of state X will likely determine the engineer’s license requirements in relation to the performance of those services. Further, the licensure requirements vary from state to state and are subject to modification and amendment by each state’s legislature and administrative bodies.

Despite these challenges, it is important that engineers maintain the proper licensure for the work or services that they perform to avoid complicating defense of a claim or lawsuit. The claimant will attempt to use an engineer’s lack of proper licensure against him or her, even if there is nothing wrong with the work performed. While an engineer’s defense counsel can try to limit or bar the use of such evidence, it is still likely to influence the case negatively for the engineer. The bottom line is that the judge or jury will be more likely to believe the claimant’s expert that the engineer made a mistake or fell below the standard of care when the claimant can show that the engineer did not hold the proper license for the services that he or she performed in the first place.

Even if an engineer’s defense counsel can exclude any evidence regarding the engineer’s improper licensure from the trial, it can still create problems for the engineer’s professional liability coverage. Under most policies, coverage is extended to an engineer only for those services that he or she is legally qualified to perform. If an engineer lacks the proper licensure to perform the subject services, he or she is arguably not qualified to perform those services. Thus, failing to obtain and maintain the proper licensure could potentially cause uninsured exposure and/or problems procuring or maintaining professional liability insurance.

Accordingly, engineers should not underestimate the importance of maintaining the proper licensure and should make it a priority to ensure they have the proper license before taking on any project.