New Statute May Limit the Liability of an Individual Design Professional

Effective July 1, 2013 a new Florida Statute may limit the liability of an individual design professional for their negligence. Florida Statute §558.0035 limits the individual liability of a design professional who is employed by a business entity provided that certain conditions are met:
First, the contract must be with the design professional’s business entity and the claimant (injured party) or another for the provision of professional services to the claimant. Second, the individual seeking protection from liability must not be a named party to the contract. Third, the contract must include a “prominent statement, in uppercase font that is at least 5 point sizes larger than the rest of the text, that, pursuant to this section, an individual employee or agent may not be held individually liable for negligence”. Fourth, the business entity must maintain the insurance required by the contract. Finally, the damages must be solely economic in nature; there must be no bodily injury or property damage resulting from the negligence.

§558.0035 is the legislature’s response to Florida common law, pursuant to which the individual, as a professional, could be held individually responsible for their negligence. However, the legislature wrote the law in a way which allows the owner to adequately protect itself from design professional negligence. Specifically, the owner should be mindful of the insurance required by the contract, both the type of policy and the limitation of liability. In many cases, professional liability insurance is written on a “wasting” basis, pursuant to which claim handling costs, i.e. attorney and investigative fees, reduce the policy limits. If the contract specifically prohibits such a policy, §558.0035 may not be implicated. Otherwise, an owner could demand higher limits of insurance if §558.0035 is invoked in the contract. If you have questions regarding the effect or interpretation of this statute, or other contract or construction related issues, it is best to seek the advice of counsel.