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[SEAOC] Earthquake Insurance Rates for 1997

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Tom Harris,                                   December 4, 1996
Thank you for your concerns about the proposed earthquake insurance rates for
1997.  I agree with your conclusions that the proposed earthquake insurance
coverage with its 15% deductibles and lower interior coverage and living
expenses does not sound like a good investment.

However, before you offer to provide seismic evaluations for homeowners
inorder for them to obtain lower insurance rates, lower deductibles, and
higher interior coverage and living expense coverage, I would hope you would
consider the potential professional liability you might be incurring.  I
would suggest that you talk with your friendly attorney and professional
liability insurance carrier about the possible increased professional
liability you might be assuming for a small professional fee as compared with
your and your estate's potential liability. 
These professionals can help you with language to put in your reports to
attempt to limit your exposure.  I am not an attorney, but you might consider
including wording  at the end of your reports like "My professional services
have been performed using that degree of care and skill ordinarily exercised,
under similar circumstances, by reputable engineers practicing in the
structural field in this or similar localities at this time.  No other
warranty, expressed or implied, is made as to the professional advice or
conclusions included in this report.  This report has been prepared for you
only to be used for your sole purposes related to the subject property.  This
report has not been prepared for use by other parties, and may not contain
sufficient information for purposes of other parties or other uses."  It
would be a good practice to get some wording in your agreement with the
homeowners to limit your professional liability to dollar value of you fee. 
Why am I so concerned about performing seismic evaluations for homeowners?
Based on an actual case, the homeowners attempted to use the Structural
Engineer's Structural Engineering Report as a "total" homeowner's home
insurance policy and sued the Structural Engineer for the repair and
replacement of their roof when it leaked during a rain storm after they had
his report.   This Structural Engineer is a personal friend and related this
case story.  In response to a request by his architectural client, he
reluctantly agreed to make the "usual" type structural and seismic
investigation for a couple, whom he was lead to believe were planning to
purchase the house.  He performed the "typical structural investigation" for
a single family dwelling and send them a report, which apparently did not
define the areas of his investigation in clear terms.  It turns out that the
couple were lawyers and had already purchase the house and attempted to use
his report as an "all comphresive homeowners policy" when the roof leaked.
 They threatened to sue for the cost of the repair and replacement of the
roof.   He retained an attorney who was able to get the threat of the lawsuit
eliminated, but the Structural Engineer had to pay a $3,000 attorney fee.

Talk to some of your other civil and structural engineer colleagues and
exchange ideas of how to carry out your very public spirited idea of how to
help homeowners to obtain more reasonable earthquake coverage for their homes
at lower rates, but, please, be very careful to protect yourself and limit
your professional liability exposure to you and even your estate, after you
are gone.

Keep up the good ideas.  You are correct, I do not make "house calls."

Frank E. McClure   FEMCCLURE(--nospam--at)