INNOVATION January-February 2016

i ns igh t

The Escape Clause Limiting Liability for Professional Engineers and Geoscientists Benjamin Kent Rob Selnes

and type of damages arising out of negligent acts from the professional services rendered. This is most commonly done through: 1) Limitation of Liability – Types of Damages: Limiting one’s liability to various damages and excluding others. For example, damages from losses due to business interruptions. 2) Limitation of Liability – Amounts: For example, limiting one’s liability to either the amount of insurance the professional carries, or to the value of the contract/fee for service. By including this language, the professional has made certain that his maximum limit is no greater than the amount of the insurance he or she carries. This protects the professional from additional damages and legal fees above and beyond the amount of insurance procured.

Limitation-of-liability language can be a prudent risk management technique to help insulate a firm or individual from additional risks other than those of the service provided. Not only has the language been used to protect firms from additional costs, it can also be used by insurance brokers as a negotiation tool to lower one’s premium and reduce overall cost to the firm or individual. Through the APEGBC Affinity professional liability program administered by Marsh Canada Limited, APEGBC members have access to 60 minutes of free legal consulting from Dolden Wallace Folick LLP. This legal consulting can include advice on how to craft limitation-of-liability language in a standard contract. If you have any questions regarding risk management techniques or professional liability insurance, please contact your local Marsh Canada licensed broker: Benjamin Kent Client Executive Marsh Canada Limited – Vancouver 604.692.4838 benjamin.kent@marsh.com Rob Selnes Vice President Marsh Canada Limited – Vancouver 604.443.3535 rob.selnes@marsh.com The opinions contained in this article are those of Marsh and not necessarily those of APEGBC. This article is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Any statements concerning actuarial, tax, accounting, or legal matters are based solely on Marsh’s experience as insurance brokers and risk consultants and are not to be relied upon as actuarial, accounting, tax, or legal advice, for which you should consult your own professional advisors . v

The Canadian construction landscape is becoming increasingly litigious, with professional engineers and geoscientists now, more than ever, being drawn into litigation that stems from construction projects—regardless of whether their service had anything to do with the loss. Both firms and sole proprietors can implement risk management techniques to protect and insulate against third-party and contractual risk. “The Escape Clause" refers to the limitation-of-liability clauses frequently used by design professionals in the construction industry. Recently, Canadian courts have upheld this language for design professionals, given the equal relationship between the contracting parties. The intent of the limitation- of-liability clause is to restrict a party’s exposure to both the quantum

32

J AN UA R Y/ F E B R UA R Y 2 016

i n n o v a t i o n