Filed Under:Agent Broker, Coverage Issues

Insuring against design failures and professional risks

History offers excellent examples of catastrophic failures as lessons for insurers. (Photo: Shutterstock)
History offers excellent examples of catastrophic failures as lessons for insurers. (Photo: Shutterstock)

Every significant human-made structure throughout history has involved architecture and engineering.

Some are memorable for their innovation and efficiency, while others are renowned for their inspiring design. Still others are remembered for a negative reason: catastrophic failure.

Design failure is more than an occupational hazard for architects and engineers. It can claim lives, destroy careers and trigger costly litigation. Professional liability insurance for design professionals offers important financial protection, but the risks are high for architects and engineers as well as their insurers. History provides some valuable lessons about mitigating professional liability risks.

Catastrophic design failure

Fans of professional and collegiate sports are accustomed to seeing events in large stadiums and arenas. The potential consequences of structural failure are dire when such venues are full of spectators, and lawsuits filed by victims and their families would be a certainty. Let's consider an example of catastrophic design failure from the ancient world and the lessons it can offer to insurers today:

Fidenae Amphitheater, A.D. 27, outside Rome. This massive amphitheater was the site of the largest structural collapse in the Roman world and one of the deadliest in history. At least 20,000 people who came to watch gladiatorial games died there. The architect, whom historians recall as Atilius, had sited the amphitheater on unstable ground and failed to account properly for the loads on the wooden structure, which gave way when the amphitheater was packed with spectators. In an early example of government regulation, that tragic event led the Roman Senate to require building inspections, certifications for builders, and minimum financial resources for anyone organizing gladiatorial contests.

Ancient Rome had a well-developed and rather sophisticated legal system, with multiple sets of unwritten laws as well as written codes dating as far back as the founding of the Republic in 753 B.C. Indeed, one of the Romans’ greatest legacies was laying the foundation on which most of the Western World's legal systems are built. The concept of a recognized legal adviser, an early form of lawyer, originated in Rome in the 3rd or 2nd Century B.C. Contract law and a formal approach to civil procedure were still under development in the 1st Century A.D.

Conduct adequate due diligence 

The concept of torts was relatively new in A.D. 27, so there likely was little relevant case law to cite. Therefore, had liability insurance been in existence at that time, the wording of the insurance contracts themselves would have been the principal means of defining the rights and duties of insurers and their insureds. An amphitheater collapse reasonably could be expected to trigger injury claims, and the designers’ insurers presumably would have been obligated to provide their insureds with a defense under their policies.

Notwithstanding that lawyers such as Cicero in the 1st Century B.C. had elevated trial rhetoric to an art form, attorneys for design professionals would have faced an uphill battle in establishing through expert evidence that their clients had met the standard of care in the wake of a major structural failure. Roman jurists of the time had significant discretion in applying laws and probably would have looked to find equitable remedies for injured Roman citizens at the expense of design professionals and their insurers.

The general advice a coverage lawyer might have offered to insuers in this era: conduct adequate due diligence on the risk, review and clarify policy wording where necessary, utilize sublimits, endorsements and exclusions as appropriate for the intended or known risks assumed, and offer loss-control services to mitigate the consequences of catastrophic failures. Indeed, this remains sound advice for professional liability underwriters nearly 2,000 years later.

Eric Moon ( is a partner in the San Francisco office of Clyde & Co., focusing on professional liability and insurance law.

Related: Marsh’s top 10 financial & professional market trends for 2017

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