Short answer
Retirement does not necessarily end an architect’s professional liability exposure. A claim can arise years after an architect stops practicing and involve professional services performed while the firm was active.
An Extended Reporting Period (ERP), commonly called tail coverage, can provide additional time to report qualifying claims arising from professional services performed before the policy terminated. It generally does not cover new professional services performed after the policy ends.
The exposure can outlive the practice
Consider an architect who retires after 30 years of practice.
During that time, the firm has designed homes, commercial buildings, schools, renovations, and multifamily projects. The architect may stop accepting new projects at retirement, but those buildings and professional services remain part of the firm’s history.
A problem could surface years later. If a client makes a claim after the professional liability policy has ended, the architect needs to understand whether there is still a way to report a qualifying claim arising from the earlier work.
This is why architect retirement insurance planning should include a review of professional liability coverage before the policy terminates.
How does tail coverage work after retirement?
An Extended Reporting Period can give the insured additional time to report qualifying claims after a professional liability policy terminates.
The ERP generally applies to claims arising from professional services performed before the policy ended, subject to the policy’s terms and conditions.
It generally does not allow the retired architect to continue providing new professional services under the expired policy.
In other words, tail coverage extends the reporting period for qualifying claims from past work. It does not extend coverage for a new practice after retirement.
How long should an architect carry tail coverage?
There is no single ERP period that applies to every retiring architect.
Available options depend on the carrier and policy. When considering architect retirement insurance, discuss factors such as:
- The types of projects the architect handled
- How long the architect practiced
- The firm’s completed and historical projects
- Applicable statutes of limitation or repose
- Contractual insurance requirements
- The cost and available length of the ERP
- Whether another policy could provide prior-acts coverage
The appropriate approach depends on the architect’s circumstances and the specific policy.
Is retirement the same as closing the firm?
Not necessarily.
An architect who completely stops practicing has a different situation from one who retires personally but leaves the firm operating.
The analysis can also change if:
- Another partner continues the firm
- The firm is sold
- Another company acquires the practice
- The architect continues occasional consulting
- The architect becomes an expert witness
- The existing entity remains active
For example, an architect may describe themselves as retired but continue providing occasional professional advice. That creates a different professional liability situation from someone who completely stops providing professional services.
Tell your broker exactly what retirement will look like rather than simply saying that you are retiring.
What if another partner continues the firm?
If the firm continues operating after one architect retires, the firm’s professional liability arrangements may continue rather than simply ending with the individual’s retirement.
The retiring architect should still discuss how the firm’s policy applies to professional services performed before retirement and whether the architect remains an insured under the policy.
The firm’s ownership structure, policy definitions, and future operations can all affect the analysis.
What if the firm is sold or acquired?
Selling or transferring an architecture practice can create different insurance considerations from simply retiring and shutting down the firm.
The transaction may involve a change in ownership, entity, or insurance arrangements. The parties should determine how professional liability coverage will apply to services performed before the transaction and whether prior-acts coverage or an Extended Reporting Period is involved.
Do not assume that a buyer’s professional liability policy automatically covers the seller’s historical work. The policies and transaction terms need to be reviewed.
What if you continue occasional consulting?
Retirement does not necessarily mean an architect stops providing professional services.
An architect who continues consulting, advising clients, or performing other professional work may have ongoing professional liability exposure. The retired architect should tell the broker about these activities before terminating or changing the existing policy.
An ERP generally addresses qualifying claims from professional services performed before the policy ended. It generally is not designed to provide coverage for professional services performed after termination.
What if you become an expert witness?
Becoming an expert witness after retirement can create another professional liability consideration.
The coverage available for expert witness services depends on the policy and whether those services fall within its definition of professional services. An architect should not assume that an existing ERP automatically covers new expert witness work.
Discuss the planned activity with your broker before accepting assignments.
What should an architect review before retiring?
Before terminating professional liability coverage, review:
- The policy’s claims-made and reporting provisions
- Available Extended Reporting Period options
- The length and cost of available tail coverage
- The firm’s historical professional services
- Applicable statutes of limitation or repose
- Contractual insurance requirements
- Whether another policy will provide prior-acts coverage
- Whether you will continue any professional services after retirement
- Whether the firm will remain active, be sold, or be acquired
Retirement is a good time to review these issues before making changes to the policy. Once coverage terminates, the options available may be different.
Related Questions
Does every retiring architect need tail coverage?
Not necessarily. The need for an ERP depends on the firm’s circumstances, the professional liability policy, historical work, available prior-acts coverage, and whether the architect will continue providing professional services.
Can a claim be made after an architect retires?
Yes. A claim can arise after retirement from professional services performed years earlier. Whether the policy responds depends on the applicable coverage and its terms.
Does tail coverage cover work performed after retirement?
Generally, no. An ERP generally provides additional reporting time for qualifying claims arising from professional services performed before the policy terminated. It generally does not cover new professional services after termination.
What if another partner keeps the architecture firm open?
The insurance analysis can differ from a complete closure. The retiring architect should review how the firm’s policy treats previous professional services and whether the architect remains an insured.
What if I continue consulting after retirement?
Tell your broker before ending the policy. Continuing to provide professional services can create new exposure that an ERP generally is not intended to cover.
Can an architect’s retirement affect coverage for old projects?
Retirement itself does not determine whether old projects remain covered. The policy’s claims-made provisions, reporting requirements, insured definitions, and any ERP or prior-acts coverage need to be reviewed.