Clarifying the Limits of Secondary Professional Liability Insurance Coverage

In September 2002 APEGBC members, through a bylaw vote, made secondary professional liability insurance (SPLI) coverage a mandatory requirement of registration with APEGBC. The program provides all members with $100,000 in secondary liability coverage (including defence costs) to protect them against claims made while the policy is in force.

The program is intended to respond to claims by the general public against an engineer or geoscientist for professional services provided. This coverage is not for firms, corporations, public entities or employers as those groups are expected to carry specific liability coverage as part of their business.

With the SPLI program now entering its fourth year, some members continue to seek clarification about the limits of coverage offered under this program for members who provide engineering and geoscience consulting services. The following is for information purposes only and should not be relied upon in determining coverage.

  • The main purpose of SPLI is to insure members engaged in areas other than standalone engineering or geoscience consulting. However, there are certain situations in which the policy applies to members who provide(d) engineering and geoscience consulting services; namely:

Category A — Current Work

1. The member is retired from full-time employment but remains a member of APEGBC with “practice rights” (see related item on facing page), or

2. The member provides engineering or geoscience consulting services on an occasional basis outside his or her regular employment (ie moonlighting),

and

3. The compensation received for the engineering or geoscience consulting services provided does not exceed $2,000 on any single project, and the total value of the compensation received for all projects does not exceed $10,000 per year. (Any subcontracted services would be included in the stated limits; if the subcontracted work is billed separately to the client, it would not be included in those limits.)

Category B — Former Work

If the consulting firm that employed the APEGBC member goes bankrupt or ceases operation, the member is covered. However, if the member is considered to be a “decision maker” (defined under the policy as any director, officer, partner or sole proprietor of an entity, or any associate or shareholder, that holds more than 10% of the share of the entity), then the policy excludes claims made against the member during the first six months following the entry into receivership or bankruptcy of the firm, or during a two-year period following the closure and cessation of operations of the firm.

General Provisions and Exclusions

  • The SPLI policy provides a $100,000 limit per claim for payment of damages to a successful claimant. Legal costs for defending the claim are unlimited up to the point where the aggregate limit of the policy for all claims is exhausted. In addition, if a member of APEGBC is sued in negligence and the plaintiff claims that APEGBC inadequately supervised the member, APEGBC would be covered but the $100,000 limit would have to cover the cost of any damage payment on behalf of both APEGBC and the member arising from the same claim.

Finally, the SPLI policy excludes various types of claims, including:

  • Claims made by any other insured. This would prevent a third party claim by one engineer or geoscientist against another.
  • Claims made within a firm; ie by the employer against employees, employees against each other, or employees against the employer. These are most likely to arise from third party claims. For example, the SPLI program will not cover claims for an employee who is third partied by his or her employer.
  • Any claim that includes a claim based on infiltration of precipitation (see Endorsement #3).
  • Any claim related to mould, mildew or other fungus.

The foregoing information was prepared with the assistance of XL Insurance. Any questions regarding SPLI in general or coverage under the policy should be directed to Peter Needra at 1-800-361-9080. Additional information on the SPLI policy, including the 2006/2007 policy wording, is at www.apeg.bc.ca/members/sec-liability-ins.html.