I'm looking at E&O policies and seeing coverage limits from $250K to $2M per claim. For those doing commercial utility audits in Texas, what limits do you carry? Oncor just asked about our coverage and I want to make sure $500K is adequate. Most of my audits are in the $50K-200K range for potential savings, but occasionally I'll find a billing error worth $400K+. Any thoughts on what's reasonable without breaking the bank?
E&O coverage limits - what's actually realistic?
Nancy, I carry $1M per claim with a $2M annual aggregate. It runs about $2,800/year through my commercial carrier. Had a close call last year on a TVA industrial account where my tariff interpretation cost the client about $180K in back charges they had to pay. Thank God it wasn't my error, but it made me realize how quickly these numbers can escalate. Better safe than sorry in this business.
I've been running $500K coverage for 5 years with no issues. Most utility companies I work with in Ohio don't even ask about E&O limits. FirstEnergy, AEP, DP&L - none have ever questioned my coverage. I think it depends on your client base and average project size. If you're doing mostly small commercial accounts, $500K should be fine.
Jim raises a good point about client requirements. LG&E started requiring $1M minimum about two years ago for any consultant doing rate analysis work. Caught me off guard and had to upgrade my policy mid-term. Cost an extra $400 but worth it to keep the contract. I'd suggest calling your major clients to ask what they require rather than guessing.
ComEd requires $1M minimum for any third-party auditors. Found that out the hard way when they rejected my $500K policy. Had to scramble to find coverage before losing the contract. For what it's worth, the jump from $500K to $1M wasn't as expensive as I thought - maybe $800 more per year.
Anyone know if these policies cover errors in demand response program calculations? I'm working on some ISO-NE programs and the potential liability is significant if I mess up the baseline calculations. My current policy has some vague language about "professional services" but nothing specific to utility programs.
Vince, most E&O policies should cover that as long as it's within your stated scope of professional services. I'd recommend getting that clarified in writing from your carrier though. The ISO programs can be worth serious money and the calculations are complex enough that errors happen. Better to know for sure than find out during a claim.
Just updated my policy to specifically include demand response and energy efficiency program work. Agent said it was a smart move given how much of that business is out there now. Added maybe $200/year but gives me peace of mind when working on those ComEd efficiency programs.