I've been doing utility audits for about 8 years and thankfully never had an E&O claim filed against me. But I'm curious what actually triggers these claims in our industry. Is it usually calculation errors, missed tariff changes, or something else entirely? My carrier keeps asking about my claims experience and I want to understand what red flags they're looking for. Anyone willing to share their experiences (without naming names of course)?
Claims experience - what actually triggers E&O claims?
Had a claim filed two years ago over a Duke Energy rate schedule interpretation. Client was on Schedule LGS and I recommended they switch to Schedule OPT-V based on their load profile. Turned out the OPT-V had a minimum charge clause I missed that cost them an extra $30K over 18 months. They sued for the difference plus their switching costs. E&O covered it but was a nightmare to deal with.
Derek, that's exactly the kind of thing that worries me. The tariffs are so complex and change frequently. I almost made a similar error with LG&E's industrial rates last month. Caught it during my final review, but it would have cost the client about $45K annually. How long did your claim take to resolve?
Earl, it took about 14 months from filing to settlement. The insurance company fought it initially because they argued it was a business decision rather than professional negligence. Eventually settled for about 70% of the claimed damages. My premiums went up about 40% at renewal though.
I've seen claims over missed power factor corrections more than anything else. JEA has some tricky PF penalties and if you don't catch capacitor bank failures, the client can rack up serious charges. Had a colleague get hit for $80K because he didn't notice the PF dropping below 0.85 for three months. Simple monitoring issue but expensive mistake.
Marcus brings up a good point about monitoring. Georgia Power's Schedule PL has some nasty ratchet provisions that can bite you if you're not watching demand patterns closely. I always tell clients to review their bills monthly, but some just assume we're handling everything. Documentation is key - I send monthly summary reports to cover myself.
Greg, do you think the monthly reports actually provide legal protection? My attorney says they might help show due diligence but won't necessarily prevent a claim if there's an actual error. I've been wondering if I should require clients to acknowledge receipt of recommendations in writing.
Bill, I require written acknowledgment for any recommendation over $10K annual impact. It's saved me twice when clients claimed they never received or understood my analysis. The paper trail is everything in these disputes. My E&O carrier actually gives me a small discount for having documented procedures.
What about statute of limitations issues? Duke Energy in North Carolina has been known to go back 3-4 years on billing corrections. If a client discovers your error that far back, are you still liable? My policy says coverage is claims-made basis, so I assume it depends on when the claim is filed.
Wayne, you're correct about claims-made coverage. The key is maintaining continuous coverage with no gaps. I had an issue arise 4 years after the work was done, but because I had continuous E&O coverage, it was covered under my current policy. Make sure you understand the retroactive date on your policy too.
One more thing - cyber liability is becoming an issue too. If you're handling utility account data and there's a breach, some clients are trying to hold consultants responsible. My carrier now offers cyber coverage as an add-on to the E&O policy. Worth considering given how much customer data we handle.