topic Re: Insurances for draftspeople in Advance Steel Forum

Insurances for draftspeople

stuart_mcleod1 — Wed, 19 Apr 2023 02:07:15 GMT

Hello,

I am just reviewing my insurances and was wondering what other people in my situation do with respect to professional indemnity and/or public liability insurance. I am a steel detail draftsperson working in Australia for Australian fabricators. I work from home producing steel detail drawings. I am not an employee of anyone nor do I have any employees. I work mainly with residential jobs and small to medium sized commercial and industrial jobs.

I don't want people to divulge their personal information or premiums they pay. I am purely interested in what types of cover they have for their work. Or I should say, what situations are people covering themselves/their business for. I imagine that there are many people in my position in Australia. Anecdotally, I understand that there is quite a range of insurance cover that people have. From people working as 'sole traders' with essentially no insurance, to extensive insurance policies that cover almost any situation that may arise.

Thanks everyone in advance.

Re: Insurances for draftspeople

gerrardhickson — Wed, 19 Apr 2023 06:21:30 GMT

Hi Stuart,

I'm in much the same situation as you, except that I do engineering here in Australia as well.
Firstly - I realise you're probably just chasing opinions on the subject, but make sure you seek advice from insurance providers, lawyers and your clients. What I'll explain is my understanding, so consider it food for thought, not solicited advice.

Insurances are intended to avoid risk - The situation is a little different between engineers and draftspeople. The highest risk comes from legally imposed responsibilities - in some jurisdictions (e.g. Queensland) engineers are legally responsible for their designs. If someone is hurt, then the engineer may face legal proceedings and be required to demonstrate that they have taken reasonable precautions to avoid someone getting hurt. For draftspersons, in all jurisdictions (as far as I'm aware), there is no legal responsibility. All work done by a draftsperson should be approved by an engineer who takes responsibility. Engineers take out insurance to protect them from the cost of defending themselves against court cases, and against damages caused by their designs. That's the legal side of things.

The next risk level down is contract enforced responsibilities. That is - a contract between yourself and a client may include LDs (liquidated damages) though they tend not to filter down as far as a draftsperson. These typically relate to failure to deliver on time and would take a cost per unit of time format (e.g. $1000/day).

Finally, the lowest risk level comes from a disgruntled client wanting to sue you for one reason or another. This is a bit of a wildcard, and I can't offer much advice here, so just be careful who you work with, and do everything you can do keep your clients happy. I think this is extremely rare, I've never heard of it happening.

So, in summary - the first thing I would do is to ask your clients what insurance they require you to have. I think the requirements for draftspeople are very low if any at all. I've hired contract drafters a number of times, and have never required them to have insurance (maybe I should have?).

The other thing to mention - it's loosely related to insurance by way of risk management - is your legal entity structure. That is, sole trader, company, or other. As I understand it, if you end up in trouble, a sole trader has all assets at risk of being lost, similarly a company may lose all of its assets - but the director of the company (you) is protected to a certain extent.

Hope that's helpful!

Re: Insurances for draftspeople

stuart_mcleod1 — Wed, 19 Apr 2023 11:17:46 GMT

Thanks for the reply. Much appreciated. And yes, I will definitely treat your comments as food for thought only.

I agree that the engineer takes the lion's share of responsibility in a lot of cases. But I guess that with my name (company name) on the shop drawings, there is certainly an avenue for insurance companies to investigate my company should a situation arise where a problem has occurred. Whether I was at fault or not. I think being a director of a company (a company that has only one employee in my case) is the minimum risk reduction that I would consider.

Thanks again for the input!

Re: Insurances for draftspeople

gerrardhickson — Wed, 19 Apr 2023 11:32:43 GMT

Insurance companies can (and will) investigate should something happen, but even if they find that you've done something wrong, they can't come after you because the legal responsibility doesn't sit with you. There is simply no legal burden - unless you've mislead your clients to believe you're providing a service you're not allowed to offer e.g. engineering.

Which raises another important point. Make sure your quotes, contracts etc clearly define what you are including and excluding, and make sure there is no wording that could be implied to include activities that carry a legal burden - e.g. engineering. I tend to go one step further, and explicitly exclude such activities. I'm an engineer, but occasionally I do drafting only jobs. It would not be a big stretch for my clients to expect that I, as an engineer, will do some engineering on their projects, and therefore step into the legal liability side of things - therefore, I explicitly state that engineering, calculations, assessment etc are excluded from those projects.

In your case, a clause to the effect of "we provide drafting services only, and all work provided should be verified by an appropriately qualified engineer" may help to make it clearer for clients, and put your mind at rest (maybe even save you some money on insurance).

One final note relates the people using the term "Designer". I've noticed this tends to be used by drafters that may have many years experience in a particular field, and who make design decisions based on intuition and/or experience. This differs from an engineer who makes design decisions based on calculation or other methods, and can therefore prove with some confidence their design is valid. The term "Designer" can be confusing for people who may not be so familiar with the industry (some of your clients perhaps), so their expectations may vary. It's even more important for people in this situation to clarify what they can and can't provide in terms of design verification.

All the best.

Re: Insurances for draftspeople

stuart_mcleod1 — Wed, 19 Apr 2023 22:21:55 GMT

Thanks again for your reply mate.

My biggest fear has always been that I make a mistake that causes significant disruption and extra cost to a job. Obviously a mistake on my part that leads to personal injury or death would be the worst outcome but I believe that is far less likely in my case. What is more likely to happen, is that I would issue drawings with say a bunch of columns that are too short or rafters missing cleats or whatever. I'm not saying that is too likely to happen, but that's just an example of what could happen as a result of my mistake. I have certainly made a few mistakes over the years, but luckily only minor things and rarely. An example would be missing a column cleat for a timber beam or not updating a column setout dim on a marking plan. On each occasion I've made such a mistake, I have been fortunate that the fabricator has not been worried at all and has fixed the problem on site themselves without 'penalising' me in any way. That's not to say that it didn't shake me up though. It turns into a chance for me to implement procedures in my work methods to help prevent the same mistake happening again which is overall a good thing.

But surely there would be some onus on the detailing company to provide correct information on the drawing that is not the responsibility of the engineer/builder/fabricator/architect? I've always understood that this is why there are notes on consultant's drawings like:

"It is the contractor's responsibility for correctness of dimensions or compliance with contract documents"

So I guess I'm more concerned with financial loss generally.

Re: Insurances for draftspeople

markhubrich — Thu, 20 Apr 2023 15:12:17 GMT

Google errors and omissions insurance.

Re: Insurances for draftspeople

stuart_mcleod1 — Thu, 20 Apr 2023 22:39:39 GMT

Thanks. Good tip. I Hadn't heard of that.

Re: Insurances for draftspeople

bettygdurand — Thu, 25 May 2023 10:20:20 GMT

Professional Indemnity Insurance: This coverage protects you against claims of professional negligence or errors and omissions in your work. As a steel detail draftsperson, this insurance can be valuable in case a client alleges that your drawings or advice led to financial loss or damage.
Public Liability Insurance: This insurance covers you if someone is injured or their property is damaged due to your business activities. For instance, if a client or a third party visiting a construction site sustains an injury or property damage related to your work, public liability insurance can provide protection.

Other considerations you may want to keep in mind:

Product Liability Insurance: If you supply or distribute products related to your drafting work, product liability insurance may be relevant. It provides coverage if your products cause injury or damage.
Cyber Liability Insurance: Given the digital nature of your work, it's worth considering cyber liability insurance to safeguard against data breaches, cyber attacks, or loss of client information.
Equipment and Property Insurance: Since you work from home, ensuring your business equipment and property (such as computer systems, software, and office furniture) against theft, damage, or loss can be beneficial.

Re: Insurances for draftspeople

stuart_mcleod1 — Tue, 30 May 2023 00:50:52 GMT

Thanks for your input!

For interest sake, my insurance strategy is this. I am the director of a proprietary limited company that has only one employee, although I initially started many years ago as just a sole trader. I do not plan to ever employ anyone in my pty ltd company (although never say never I guess...) and so the purpose of the company is just to help remove myself from the liability associated with any claims that may be made against the company. It's not at all a full and complete insurance policy, but it works for me.

Further to above, I also have public liability insurance. I do not have PI insurance. The reason for this is that mistakes I make have always only been on rare occasions plus they have only been small and have been able to be rectified without a high cost to anyone. The reason I mention this is because although I am likely to make more mistakes in the future (I don't plan to make mistakes, but everyone does slip up occasionally...don't they?😂), I do not see that I would ever need to make an insurance claim to rectify the problem.

Thanks to all for their thoughts!

Re: Insurances for draftspeople

dakotab_enton — Tue, 06 Jun 2023 09:26:05 GMT

Hey there! As a fellow draftsman, I totally get your concerns about insurance. It's crucial to protect ourselves and our businesses. From what I've heard, different people have different levels of coverage. Some opt for basic professional indemnity and public liability insurance, while others go for more extensive policies. If you're looking for expert advice on this matter, I came across a helpful resource at https://ibgportland.com. They offer consulting services that could provide valuable insights for your specific situation.