1. NJSPLS The Character and Nature of Claims Against Land Surveyors Ed Pagan, Jr., Esquire Pagan Affiliates LLC ed@paganaffiliates.com Richard N. Hartman Construction Risk Management Consultants LLC rhartman@marquisagency.com THE MARQUIS AGENCY & VICTOR O. SCHINNERER/ CNA The Marquis Agency 900 Rt. 9 North, Ste. 503 Woodbridge, NJ 07095-1003 www.marquisagency.com Present: February 8, 2008

2. 2 What is a Claim?

3. 3 Any written demand received by an Insured seeking remedy and alleging liability or responsibility on the part of the Insured or persons for whose conduct the Insured is legally liable. Any written demand received by an Insured seeking remedy and alleging liability or responsibility on the part of the Insured or persons for whose conduct the Insured is legally liable.

4. 4 What is a Pre-Claim?

5. 5 The Insurance Company will pay for all costs or expenses the Insurance Company incurs until the date a Claim is made as a result of investigating a circumstance reported by the Insured. The Insurance Company will pay for all costs or expenses the Insurance Company incurs until the date a Claim is made as a result of investigating a circumstance reported by the Insured.

6. 6 Where and by whom do they come from?

7. 7 Insurance Company Claims Studies Important claim data to assist Surveyors in assessing and analyzing client and project risks

8. 8 Frequency of Claims by Claimant Identification (1997-2006) Client General Contractor Third Party Property Damage Specialty Contractor Other 18% 11% 2%3% 66%

9. 9 Claims by Project Type (1997-2006) Frequency= Reported Claims Severity= CNA dollars Spent Houses/ Townhouses Land/ Site Develop HighwaysRetail/ Restaurants Office Bldgs/ Banks Schools/ Colleges Condos 0% 5% 10% 15% 20% 25% 30% 35%

10. 10 Residential Projects: Claims by Problem Area (1997-2006) Frequency= Reported Claims Severity= CNA Dollars Spent Boundaries/ Easements/ Trespass Construction Stakeout Site Preparation 0% 10% 20% 30% 40% 50%

11. 11 Commercial Projects: Claims by Problem Area (1997-2006) Frequency= Reported Claims Severity= CNA Dollars Spent Construction Stakeout Boundaries/ Easements/ Trespass Site Preparation 0% 10% 20% 30% 40% 50%

12. 12 Reported Claims Per 100 Firms 198419861988199019921994199619982000200220042006 Number of Claims 0 4 8 12 16 20

13. 13 Claims Frequency Per 100 Firms 1997 199819992000200120022003200420052006 0 3 6 9 12 15

14. 14 Cumulative Percentage of Claims (1997-2006) Prior 0-1 Year After 2-3 Years After 4-5 Years After 6-7 Years After 8-9 Years After 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

15. 15 Percentage of Claims Closed with Indemnity Payment 1997199819992000200120022003200420052006 30% 34% 42% 46% 50% 38%

16. 16 Percentage of Claims Closed with Defense Payment Only 1997199819992000200120022003200420052006 0% 5% 10% 15% 20% 25% 30% 35%

17. 17 What causes claims?

18. 18 Strategies for avoidance

19. 19 Early warning signs

20. 20 Root Causes of Claims:

21. 21 Root Causes of Claims: Client Client Scope of Services Scope of Services Fee Fee

22. 22 Root Causes of Claims: Communication Communication Innate desire to please Innate desire to please

23. 23 Root Causes of Claims: Lack of Mutual understanding Lack of Mutual understanding Reliance on information furnished Reliance on information furnished

24. 24 Strategies for Avoidance

25. 25 Strategies For Avoidance: How do we Limit or Avoid the Potential for Claims? How do we Limit or Avoid the Potential for Claims?

26. 26 Business Steps for Avoidance: Step by Step Guide to: 1) Protect the interests of your firm 2) Identify root causes of claims and early warning signs

27. 27 STEP 1 What does the owner/ client want?

28. 28 STEP 2 Why does the owner/ client want it?

29. 29 STEP 3 When does the project need to be completed? ● Is this schedule realistic?

30. 30 STEP 4 What information does the owner/ client have that is necessary for the surveyor to perform its services?

31. 31 STEP 5 Do we have the capability/ capacity to complete this project?

32. 32 STEP 6 Is the fee/compensation adequate/appropriate to properly perform the services and assume the risks we’re being asked to assume? Is the fee/compensation adequate/appropriate to properly perform the services and assume the risks we’re being asked to assume? Do we have all of the information to answer this question? Do we have all of the information to answer this question?

33. 33 STEP 7 Memorialize these understandings Leads to development of a Contract Leads to development of a Contract Scope of services Scope of services Fee w/specified payment provisions Fee w/specified payment provisions

34. 34 The Surveyor, the Attorney, the Claimant and the Claim

35. 35 PHASE 1 Initial Notice of a Claim

36. 36 A Step By Step Guide for you to follow to: 1) Protect the interests of your firm 2) Understand and take advantage of the coverage and services afforded by your professional liability policy and insurer

37. 37 1. STAY CALM

38. 38 2. Accept all letters and correspondence without comment or argument

39. 39 3. DO NOT admit liability and DO NOT attempt to place blame

40. 40 4. Gather ALL information/ Develop a chronology of events from start of project up to initial notice of claim. All principals and staff members involved in the claim should be prepared to document the circumstances surrounding the allegations. All principals and staff members involved in the claim should be prepared to document the circumstances surrounding the allegations.

41. 41 5. Contact your Broker - Discuss matter - Start to understand coverage and services available to your firm

42. 42 6. Send Information to Broker Send basic information only – more detailed information will be sent to insurance company and attorney Send basic information only – more detailed information will be sent to insurance company and attorney

43. 43 The written report to your insurance company should include the following: Your firm’s name and address Your firm’s name and address Brief narrative description of the allegation against you Brief narrative description of the allegation against you Name of person or entity making the claim Name of person or entity making the claim

44. 44 The written report to your insurance company should include the following: Amount of demand, if known Amount of demand, if known Any lawsuit papers or legal proceedings Any lawsuit papers or legal proceedings

45. 45 The written report to your insurance company should include the following: Contract with client for the project Contract with client for the project Any other documents or correspondence, including newspaper accounts Any other documents or correspondence, including newspaper accounts

46. 46 The written report to your insurance company should include the following: NOTE: If the Claim/ incident involves a traumatic situation (ie: structural collapse or serious bodily injury etc.): NOTE: If the Claim/ incident involves a traumatic situation (ie: structural collapse or serious bodily injury etc.): -Take photographs of claim site if possible Amateur photos taken promptly are more valuable than professional ones taken at a later date. Amateur photos taken promptly are more valuable than professional ones taken at a later date. -In addition provide: Date, Time, and Location of the situation. Date, Time, and Location of the situation.

47. 47 7. Broker sends Information to Insurance Carrier

48. 48 PHASE 2 The Claim, The Insurance Carrier & Client

49. 49 1. Remain Calm

50. 50 2. Insurance Carrier/Claim Analyst will contact you - Discuss what to expect from carrier - Discuss choice of defense counsel to represent your firm with insurance carrier/ claim analyst

51. 51 3. Insurance Company will assign defense counsel ALWAYS REMEMBER THAT DEFENSE COUNSEL REPRESENTS YOU AND YOUR FIRM, NOT THE INSURANCE COMPANY ALWAYS REMEMBER THAT DEFENSE COUNSEL REPRESENTS YOU AND YOUR FIRM, NOT THE INSURANCE COMPANY

52. 52 4. Tell claim analyst you have the chronology of events Complete chronology with documentation Complete chronology with documentation

53. 53 5. Write down all questions you want to discuss with defense counsel

54. 54 6. Send questions to defense counsel before meeting

55. 55 7. Prepare for meeting Have copies of all contracts/ professional service agreements, correspondence, and memoranda available to give to defense counsel Have copies of all contracts/ professional service agreements, correspondence, and memoranda available to give to defense counsel

56. 56 Underwriting Impact

57. 57 Underwriting Impact Loss Run & Loss Ratio – losses paid over 5 and 10 year time periods compared to premium paid over same time periods. Loss Run & Loss Ratio – losses paid over 5 and 10 year time periods compared to premium paid over same time periods. Losses Paid is sum total of: Losses Paid is sum total of: Indemnity Paid Indemnity Paid Expenses Paid Expenses Paid Total Reserves – open claims Total Reserves – open claims