Professional Liability Insurance for Engineers

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What is Professional Liability Insurance for Engineers?

Professional liability insurance for engineers provides coverage in the event the client or a third party sues you. As an engineer, you provide expert service to your clients. These services come with the knowledge that you’re capable of performing the duty you’re being paid for. But if a mistake does occur, then that can lead to financial loss for the client. If the client tries to sue you, professional liability insurance for engineers will protect you and your business.

 

Is Professional Liability Insurance Required For Engineers?

Engineers should have two kinds of engineering insurance policies – professional liability insurance and general liability insurance. These two may look similar, but they provide coverage for very different things.

As an engineer, you want to ensure that you’re providing the best services possible to your clients. But this may not always be possible. Situations outside your control can cause delays or setbacks for your clients. For instance,

  • You promised the client that you would complete the project by a certain date. By the time the date arrived, you were still not able to complete the project. The delay caused financial complications for your client, and they decided to recuperate the money by suing your business.
  • You or one of your employees ordered an expensive product in excess. Most of the product was not used and it can’t be sent back either. The client sues your company as a way to get back the money they spent on the unused material.
  • You haven’t done anything wrong, but the client or a third party sues your business, claiming that your bad advice cost them money.

In all these situations and more, professional liability coverage will cover you and your business. This includes your employees, the board of directors, as well as temporary hires, consultants, contractual employees, and so on if they are mentioned in the insurance document.

Engineers offer services to people. These services can include knowledge, consultation, design, programming, strategizing, and other services, depending on the type of engineering.

If your work fails to satisfy a client, you run the risk of being sued. Even if you didn’t do anything wrong, you’d still have to appear in Court to clear your name. This means that you’ll have to pay for expensive lawyer fees, Court costs, as well as fines, settlements are compensations as directed by the Judge.

Professional liability insurance for engineers, also known as PI insurance for engineers, will cover your defense and claims costs.

How Much Does Professional Liability Insurance For Engineers Cost?

The exact amount you’ll have to pay as a premium for professional liability insurance for engineers depends on various factors. The higher your risk of being sued, the higher your premium will be.

Even if this amount seems high to you initially, remember that Court costs often run into thousands of dollars. Your business can potentially go bankrupt by being sued and going to Court.

Some of the factors your insurers will look at when deciding your premium include

  • Profits: This shows how much your engineering business is making annually. The more your business makes, the higher the risk. These profits will also include any profits brought in by consultants.
  • Employees: If your engineering business hires more employees, then they pose a higher risk. This is as a greater number of employees implies that there are greater chances for mistakes to happen. Engineering businesses with more employees pay higher premiums and vice versa.
  • Expertise: The kind of engineering services you provide will also have a say in determining how much you need to pay for your PI insurance for engineers.

Insurance companies often hire actuaries to help in the process of deciding premiums and professional liability policies. The company will pore through your past claims history, coverage limits, business size, and location, as well as deductibles to determine your annual premium.

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Why Should You Get Professional Liability Insurance For Engineers?

Mistakes and accidents are unavoidable parts of life. Something completely out of your control, like bad weather, could easily lead to a delay in how fast you deliver your project. The materials you need may not be available, or the designer may make a mistake when ordering. You could be a software engineer who makes a mistake in programming, or you could be a civil engineer who gave incorrect advice.

If the client or a third party feels that they’ve been negatively financially impacted as a result of your professional work – they can sue you.

Aside from the money you’ll have to spend to protect your engineering business, you also face the risk of losing your reputation if you lose the case. A professional liability cover for engineers would protect you and your business if another person were affected by you in the course of duty.

This is a little different from other insurance coverage engineers are often asked to get. This is the general liability insurance for engineers. The PI insurance for engineers, where the PI stands for professional indemnity, applies only to legal issues and claims pertaining to your professional duty and services. This also includes issues faced during the delivery of your services, as well as after your service is over. If a home you worked on has a mold problem later on, you could potentially be sued for it.

Here, general liability insurance won’t protect you, but PI insurance for engineers absolutely will. General liability insurance covers broader issues like a slip and fall. On the other hand, professional liability insurance for engineers focuses on issues that arise during and through work.

What Does Professional Liability Insurance For Engineers Cover?

Professional liability insurance is an Errors and Omissions Insurance policy that covers the policyholder in a variety of legal scenarios. These include

  • Court costs and legal fees.
  • Court settlements and claims.
  • Reimbursements up to a reasonable amount if you have to leave work/travel to appear at Court.

You can also get pre-claim assistance with some policies. This is where the insurance company steps in before the claim is made to try and prevent the claim from happening. This occurs when you notice the potential for someone to sue your business and take preventative steps to protect yourself.

Professional liability insurance for engineers is typically claims-made. This means that if the policy is active when a claim is made, then the insurance company will provide coverage. This helps especially when it comes to past claims. If the claim appears when your professional liability insurance for engineers is active, you get help from the insurance company. However, you need to be careful of retroactive dates when it comes to past claims. This is a date mentioned in the policy beyond which the insurance company won’t cover you.

Turn to Engineers Insured for great professional liability insurance for engineers. PI insurance for engineers will protect you and your business and provide coverage against legal fees and settlement costs.

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