I'm setting up my own utility auditing practice after 12 years working for larger firms. Been getting quotes for E&O insurance and the prices are all over the map - from $1,200/year to $4,500/year for $1M coverage. The cheaper policies seem to have a lot of exclusions that worry me. Who are you guys using for E&O coverage and what should I be looking for in the fine print? I'll primarily be doing commercial audits in Oregon and Washington, mostly Portland General Electric and Puget Sound Energy accounts.
Best E&O carriers for small utility auditing firms?
Jorge, I've been with Professional Underwriters for 6 years now, about $2,800/year for $1M/$3M limits. They know our industry well and their claims handling has been excellent. Had two small claims over the years - one with Chugach Electric here in Anchorage where they disputed our power factor analysis, and another where a client's check bounced after we'd already submitted their refund request. Both were handled smoothly without hassles.
Stay away from the cheapest quotes Jorge. I learned that lesson when I started out in 2014. Got a $1,100 policy that excluded 'failure to obtain expected savings' - which is basically the main risk in our business! When Alabama Power disputed a $28,000 refund claim I'd submitted for a client, I found out my coverage was worthless. Now I pay $2,400/year with Beazley and sleep much better at night.
Technology Insurance Company has been good to me. About $1,950/year for $1M limits with a $2,500 deductible. They understand utility auditing specifically - most of their underwriters actually know what a tariff schedule is, which is more than I can say for some carriers. Had a claim last year when a client in Rapid City accused me of missing a rate change that cost them money. TIC handled it professionally and it was resolved in my favor.
I'm also in Portland and just went through this same process. Ended up with CNA Insurance through a local agent who understands professional services. $2,200/year for $1M coverage with a $1,000 deductible. The key thing I found is making sure the policy covers you if the utility disputes your findings, not just if you make a calculation error. That's where a lot of the cheaper policies fall short.
Jorge, whatever you do, make sure your policy covers defense costs IN ADDITION to the policy limits, not as part of them. I had a situation with Entergy Arkansas where they disputed a $35,000 refund and my legal defense costs alone were $12,000. If those costs came out of my $1M limit, that would have significantly reduced my coverage for any actual settlement or judgment.
Jorge, how did your insurance shopping turn out? I'm up for renewal next month and my current carrier (CNA) is raising my rates 25%. Looking at switching but want to make sure I don't end up with coverage gaps. The market seems to be getting tougher for our industry with all the utility bankruptcies and regulatory changes in recent years.
Great thread everyone. For those newer to the business, I'd add that you should also consider cyber liability coverage as an add-on or separate policy. We handle a lot of sensitive customer data and utility account information. Had a colleague in Nashville whose laptop was stolen with client files on it - the potential liability was huge. Also make sure your E&O policy covers subcontractor work if you ever plan to use freelance engineers or analysts.
I second the recommendation for Technology Insurance Company. Been with them for 3 years now here in Idaho. They actually have sample policies on their website specifically for utility auditors. The coverage is comprehensive and includes things like regulatory proceedings and licensing board complaints. Idaho Power tried to get my consultant license revoked last year over a disputed analysis - TIC covered all my legal costs to defend it.
One thing to watch out for - some policies exclude coverage if you're working on contingency vs fixed fee arrangements. I do about 60% contingency work here in Memphis with MLGW accounts, and had to specifically add an endorsement to cover that. Cost an extra $400/year but worth it since contingency work is often where the bigger disputes happen.
The insurance landscape has definitely gotten more expensive since COVID. I'm seeing quotes 30-40% higher than they were just 3 years ago. But it's still essential coverage - one major lawsuit can wipe out years of profits in this business. I've been with Chubb for 2 years now, about $3,200/year for $2M limits but their financial strength rating is excellent and claims service is top-notch.