E&O Insurance for Engineers

Businesses and independent consultants who offer professional services such as engineers and engineering firms typically need errors and omissions insurance for professional engineers  given the multiple risks that they face. A client can hold you or your firm liable for alleged or actual:

• Breach of contract
• Providing substandard work
• Work oversights
• Missed deadlines
• Project delays
• Overshooting the budget
• Negligence
• Use of wrong materials

In many cases, even if the engineer or engineering firm has provided good quality work, a dissatisfied or difficult client can file a E & O claim over a minor perceived problem.

As leading insurance providers, we at Engineers Insured have also seen that one of the most common drivers of engineering E&O insurance for engineers is that there is a mismatch of expectations between the client and the engineering professional. This could arise due to a lack of documentation with project owners and contractors, specifically when changes are made to the finalized design or other project specifications. In these cases, it is possible for you to prove that you had not done anything wrong and win the lawsuit.

However, when you do not have E & O insurance, you would have to incur out-of-pocket expenses related to court costs and attorney fees. Without the right E&O insurance, these claims result in major financial difficulty, not to mention the damage to reputation of your business.

A recent survey shows there is an upswing related to claims on errors and omissions insurance for professional engineers. While there is an increase in higher value engineering projects, the survey report also states that the awards handed down by juries are getting larger and larger.

The report found that E & O claims were the highest in specific engineering disciplines such as structural engineering, geotechnical engineering, mechanical engineering, civil engineering, architecture, and design engineering. Many of the claims are typically centered around major or minor infrastructure, geotechnical and residential projects such as high-rise condominiums, single family housing and apartment buildings.

For instance, a lawsuit was filed recently by a Residential Owners Association claiming damages for multiple construction defects in a $1.5 million project. Subsequently the association also terminated the contract with the engineer citing construction and design defects such as use of unsuitable materials for the coastal environment.