Insurance For Engineers - Professional Liability
The most important type of insurance for engineers is professional liability insurance, also known as errors & omissions insurance.
What is it?
Professional liability insurance for engineers covers actual or alleged damage done to clients and other members of the design and construction team as a result of engineering services. Related legal fees are also covered. Note that this covers what is potentially the most severe financial risk for engineering firms and is therefore highly recommended.
When should I consider carrying the coverage?
Many engineers purchase this coverage in response to a contract requirement. Note that professional liability insurance is the project owner’s primary means of recovering from losses due to design errors, so the requirement becomes more common as projects become larger and more complicated.
From a coverage standpoint, purchasing early on will provide you with the most comprehensive protection as the policy only covers services rendered after the policy is purchased and held continuously. When purchasing, look for an insurance company that has a solid financial rating and caters to engineers seeking coverage for the first time. The quality of claims and risk management services is also a consideration.
Lastly note that without professional liability insurance, any project owner or client of the engineer would have to go after the engineering firm’s assets as a remedy to damages caused by an engineer’s design errors.
Professional liability insurance is undoubtedly necessary for large engineering firms. How important do you think professional liability insurance is for a small engineering firm? Is it worth the expense? Let us know in the comment section. Feel free to contact us with any questions.
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