General Inquiries

General Liability Insurance in California

  • 1.  General Liability Insurance in California

    Posted 06-14-2019 09:57
    We are an engineering firm based in Louisiana with offices and clients in California.  Our largest California clients include Pacific Gas & Electric and San Diego Gas and Electric.  Our insurance agents are currently working on our insurance renewal and have informed us of astronomical increases in our general liability insurance due to the current wildfire situation and litigation.  We do not self perform construction and we rarely hire subcontractors who perform work in the field.  We do perform some design work and fire mitigation review programs for these clients.  Is anyone else in the CA area experiencing these insurance increases? If so, how are your managing this?

    Thank you in advance for your input.

    Pamela Flucke B.S. Major Accounting
    Ampirical Solutions LLC
    Mandeville LA
    (985) 249-7447

  • 2.  RE: General Liability Insurance in California

    Posted 06-17-2019 10:47
    Hi Pamela

    I do not have any direct experience with your sector or the issues you raise, but I do have a good friend who worked in risk management for utilities for the majority of his career, and is now doing some consulting work in that space.  I posed your question to him and he offers the following response:
    Here are some suggestions to help managing your general liability insurance renewal regarding California utility wildfire risks:

    "If you do not currently meet with your underwriter(s), make a trip (with your agent/broker) in person to meet and discuss with your underwriter(s) the following matters.  This can be done on a conference call as well.  Having a brief presentation (high-level bullet points only) will help facilitate your discussion:
         (a) Discuss what you do not do – you do not self-perform construction and rarely hire subcontractors who perform work in the field.  You do not have hands on the powerlines/poles, nor trim trees.  This narrows down the realms of possibilities for what your firm could be legally liable for in the mind of the underwriter.
         (b) Discuss in detail the specific types of work you do perform for PG&E and SDG&E.  Because of wildfire losses, PG&E is seen as being much more catastrophically exposed to wildfire risk than the other utilities; SDG&E, due to its longer term efforts with wildfire risk mitigation and smaller service territory, is seen by underwriters as "best in class" in utility wildfire risk mitigation.  By explaining in detail the what you do - design work and fire mitigation program reviews – you can help the underwriter understand how your liability for "wildfire" work is minimized.  Also discuss how you are protected in your contracts with PG&E and SDG&E (limitation of liability for wildfire, indemnity obligations the utilities owe you). Your attorney should help you with a short analysis of contractual protections your contracts provide you.  If you do more work for SDG&E than PG&E, highlight that fact as well.
         (c) Point out that the current wildfire situation and litigation is specific to the CA utilities only due to Inverse Condemnation, which view the utilities as quasi-governmental entities subject to strict liability for property damage and legal fees arising from wildfires caused by their powerlines regardless of fault.  You are not held to the same standard, so your liability, based on the work you do for the utilities, comes down to the utility proving your legal liability/fault through the contract you have with them for the scopes of work you do for them.
         (d) Underwriters may have questions during the discussion – answer what you can however it is always better and acceptable to tell them "we will get back to you with an answer." This gives you time to craft a succinct and appropriate response."

    I hope this helps with your situation, but if I can offer any other assistance, please do reach out to me?



    David Dolnick CRIS
    Dolnick Risk Advisors
    San Diego CA
    (619) 569-2280