1.2 Apply the Regulations and Requirements Governing the Work Environment

Question 1

Additional Insured

Answer 1

A third party that the insurer agrees to also cover in the event of a claim. The architect and their consultants must be covered this way by the contractor’s CGL policy according to AIA A201, article 11.1.1.

Question 2

All-risk Policy

Answer 2

A type of insurance policy that covers every potential type of claim, except certain enumerated instances listed in the exclusions section of the policy.

Question 3

AXP (Architectural Experience Program)

Answer 3

Developed by NCARB, this program is used by most jurisdictions to guide and document the work experience of candidates working towards licensure. Some jurisdictions modify the experience requirements required to obtain licensure.

Question 4

Betterment

Answer 4

A legal concept that forms a defense for architects against claims of errors or omissions by a client. It states that the architect should only be held responsible for the additional cost incurred due to an error or omission; the owner is still responsible for the cost of the item as if it had been properly designed in the first place.

Question 5

Certificate Holder

Answer 5

Someone who is in receipt of a COI, such as the client. Having a copy of the COI does not afford you additional insured status.

Question 6

Certificate of Insurance (COI)

Answer 6

A document that describes the type and amounts of coverage that you or your firm has, as well as the date that coverage will lapse if not renewed. You can present this document to a client to provide proof of coverage.

Question 7

Claims-made Policy

Answer 7

An insurance policy that only covers claims that are made if the policy is in place when the error is alleged to have occurred and if the policy is in place when the claim is made. Most professional liability policies follow this model for coverage.

Question 8

Commercial Automobile Insurance

Answer 8

This type of insurance policy covers vehicles owned by your business. This is a specific type of policy and is different from the type of insurance that you’d have on your personal vehicle, because it includes the additional risks associated with commercial use.

Question 9

Commercial General Liability (CGL)

Answer 9

This type of insurance policy covers potential claims that could occur when an injury occurs at your place of business, or when someone’s property is damaged as a result of your business operations.

Question 10

Continuing education

Answer 10

An ongoing requirement which stipulates that licensed architects must remain current in their knowledge of the profession and its development.

Question 11

Deductible

Answer 11

The amount that you must pay if you’re found to be at fault in a claim before your insurance pays anything.

Question 12

Employee

Answer 12

A type of worker for a firm who typically receives a salary and benefits, paid time off, and produces their work using company hardware and software.

Question 13

Employee Handbook

Answer 13

A document that codifies a firm’s policies relating to compliance with employment law, time off, pay periods, etc.

Question 14

Employment Practices Liability Insurance

Answer 14

This type of insurance policy covers businesses from lawsuits brought by employees who allege that you engaged in improper employment practices, such as discrimination.

Question 15

Employee Eligibility Verification Form (I-9)

Answer 15

All employers must have new hires complete this form within three days of employment - it’s used to verify that the new hire has the right to work in the United States.

Question 16

Employee’s Withholding Certificate (W-4)

Answer 16

This form is filled out by employees to determine how much in taxes will be retained from their paycheck and paid directly to the government.

Question 17

Endorsements and Exclusions

Answer 17

An addition to an insurance policy document that can either revise terms and conditions listed in the policy, or specifically list certain types of claims as not being covered under the policy. For example, property insurance typically lists flooding and hurricane damage as exclusions - if these events are likely, you’d need to purchase specific insurance policies to cover them.

Question 18

Equal Employment Opportunity (EEO) Act

Answer 18

A law that requires employers to treat all potential candidates for a job fairly when they’re applying, as well as once hired. This law prohibits discrimination based on disability status, age, or other protected classes.

Question 19

Exempt Employees

Answer 19

A salaried employee who does not receive overtime pay if they work over 40 hours in a week or 8 hours in a day.

Question 20

Family Medical Leave Act (FMLA)

Answer 20

Employers with 50+ employees are required to comply with this act - it requires up to 12 weeks unpaid leave in any 12-month period to take care of a sick relative or for childbirth.

Question 21

Fidelity Bond Insurance

Answer 21

This type of policy protects a firm financially from potential employee theft.

Question 22

Independent Contractor

Answer 22

A type of worker for a firm who typically has more flexibility in the way their work gets done and the hours during which they perform work. They receive a lump-sum payment from the company that does not cover benefits, time off, or any hardware or software required to complete the work.

Question 23

Insurance Broker

Answer 23

A person or firm who collects information about your insurance needs, requests quotes from a variety of insurance carriers, and presents those quotes to their client in order to make an informed decision about insurance coverage. They also assist with insurance renewals and are a valuable asset in the event of a claim.

Question 24

Insurance Claim

Answer 24

A request made to the insurer by the insured for coverage or compensation as a result of a specific incident occurring.

Question 25

Insurance Policy

Answer 25

A document detailing the terms and conditions of a contract for liability coverage between the insurer and the insured.

Question 26

Insured

Answer 26

The party in an insurance contract, sometimes referred to as a policyholder, who pays a premium in exchange for receiving liability coverage, such as for professional liability.

Question 27

Insurer

Answer 27

The party in an insurance contract that provides coverage.

Question 28

Licensed Carrier

Answer 28

An insurer that has been approved by the jurisdiction to provide insurance. These types of insurers provide more credibility and assurance that you’ll be covered in the event of a claim.

Question 29

NAAB

Answer 29

National Architectural Accrediting Board: an accrediting body for architectural education in the U.S.

Question 30

Named-peril Policy

Answer 30

A type of insurance policy that only covers specific claims or types of damage, as listed in the insurance policy. All other types of issues or damage are not covered.

Question 31

NDA

Answer 31

Non-Disclosure Agreement: a signed agreement which states that the signee will not reveal sensitive information protected by the agreement.

Question 32

Occurrence-based Policy

Answer 32

An insurance policy that covers any acts that are alleged to have occurred during the policy period. This kind of policy does not need to be in place when the claim is made in order for the insurer to provide coverage.

Question 33

Policy Limit

Answer 33

The maximum amount that an insurer will pay out in the event of a claim. These are typically written as a certain amount per occurrence, and a certain amount in aggregate. For example, a $1mm/$2mm policy would pay a maximum of $1mm for any single claim, and a maximum of $2mm in total for any amount of claims that occur during the coverage period.

Question 34

Premium

Answer 34

The amount that the insured pays, typically monthly, to the insurer in exchange for insurance coverage in the event of a claim.

Question 35

Professional liability insurance

Answer 35

Insurance held by a business to protect it against claims of malpractice in the delivery of its professional services. Also called errors and omissions insurance.

Question 36

Prior Acts Coverage

Answer 36

A kind of insurance that provides coverage for actions that were made before the policy was in place. This kind of insurance policy can be used when changing insurance carriers, so that your new carrier covers issues that could arise from projects completed in the past.

Question 37

Property Insurance

Answer 37

This type of insurance covers the physical premises where your office is located if damage occurs due to fire or other types of accidents.

Question 38

Negligent Referral

Answer 38

A legal issue where a claim is made by a new employer against a previous employer for not providing information about a former employee, when specifically asked, that may have resulted in the potential employer not hiring the person. An example is Firm A, a potential employer of Employee X, asking Firm B, a former employer of Employee X, why Employee X no longer works for the firm. If firm B declines to respond, but Employee X was terminated due to fraud, Firm A may have a case against Firm B.

Question 39

Non-Exempt Employees

Answer 39

An employee who is entitled to receive overtime pay if they work over a certain amount of time per day or per week, typically 8 hours per day or 40 hours per week.

Question 40

Reciprocal licensure

Answer 40

An arrangement in which a state will recognize a professional license issued by another state.

Question 41

Responsible Control

Answer 41

A term found in the NCARB model law and regulations that describes the involvement and oversight required by the architect of record in order to be able to sign and seal documents. You risk ethical and legal consequences if you sign and seal documents without this level of involvement and oversight over their creation.

Question 42

Spearin Doctrine

Answer 42

A foundational construction law case that established a liability gap that exists for owners. The case held that architects, when acting within their professional standard of care, are not required to produce perfect drawings, and that contractors are bound to build according to those drawings. When an error or omission occurs that’s outside the standard of care, the owner is responsible for the cost to remedy.

Question 43

Statute of Limitations

Answer 43

A time limit on how long after an error or omission is discovered that a claim can be made.

Question 44

Statute of Repose

Answer 44

A time limit on how long after an error or omission occurs that a claim can be made. On construction projects, this limit often begins at the date of substantial completion. The length of the time limit varies by jurisdiction.

Question 45

Tail Coverage

Answer 45

A kind of insurance that provides coverage after policies lapse - firms or architects typically purchase this policy when retiring or when ceasing operations as a firm.

Question 46

Umbrella Coverage

Answer 46

A broad type of insurance, this kind of coverage goes above and beyond all of your existing insurance policies and provides additional coverage, in the event that those individual policy limits are exceeded. These types of coverage typically exclude professional liability issues.

Question 47

Valuable Papers Insurance

Answer 47

This insurance policy covers the cost to reproduce essential business items, such as project files, samples, or models, that could be lost during a fire or other catastrophe.

Question 48

Wage and Tax Statement Form (W-2)

Answer 48

This form is received by employees at the end of each year, and shows how much money was withheld from their paychecks for the previous year.

Question 49

Waiver of subrogation

Answer 49

This occurs within the context of insurance claims recovery when an insurer pursues repayment from a third party on behalf of the insured. When you waive this right, you’re agreeing that your insurance company will not do this in the event of a claim.

Question 50

Worker’s Compensation Insurance

Answer 50

A type of insurance that is required by law for employers to have, this type of policy provides coverage when employees are injured while performing their job.

Question 51

Professional Liability Insurance considerations for architect

Answer 51

To uphold social responsibility in the event of harming another entity.

To meet contract requirements.

For long-term business survival.

For continuing operation if a claim is levied against the firm.

Question 52

Protocols when terminating an employee (firm is in a jurisdiction that has ‘at will’ employment laws)

Answer 52

Arrange to have a witness to the termination.

Create a release-and-severance agreement for the employee.

Keep records that support the nonperformance.

Give a reason for termination, even if the law does not require it.

Question 53

Mutual non-disparagement agreement

Answer 53

Both parties agree not to disparage the other. Both sides promise not to say anything bad about each other that could hurt their reputation or business. This means they agree not to insult, criticize, or talk negatively about each other.