Majority of Architects Do Not Carry Insurance for Liability

More than half of the state’s architectural firms do not have liability insurance, according to a survey taken by the Sacramento-based California Council, the American Institute of Architects.

Of the 815 firms surveyed, 58.6% said they do not have coverage. The survey was sent to 2,700 firms, with 33% responding, which Ralph H. Bradshaw Jr., chairman of the project, called an “unprecedented response.”

“The results seemed to show that smaller firms are much more likely to be uninsured than larger firms,” Bradshaw said. About 79% of the firms responding had fewer than 10 employees.

“Since California firms are mostly small businesses with fewer than 10 employees, the data demonstrates how big a problem the majority of California firms face in finding, affording and keeping professional liability insurance,” he said.

The survey showed that 20.6% of California firms had one or more claims during 1986 and 1987. Firms with 20 or more employees have the greatest chance of experiencing a claim. However, the survey noted that the low percentage of claims may reflect a belief that a claim referred only to lawsuits and not demands for some action, including arbitration.