Insurance
A Deep Dive Into Business Owners Policy Exclusions to Avoid Surprises
January 27, 2025
| January 16, 2025
Author: KimberleeEdited by: Kimberlee and Reviewed: Kimberlee
Engineers are professional service providers who work with technical solutions. A mistake can cost clients tens of thousands, if not more, and lead to a disaster. That is why engineers should have a professional liability insurance policy to protect themselves from financial liability for mistakes.
Professional liability insurance complements a general liability insurance policy. Where the general liability policy covers third-party claims due to general operations, the professional liability policy covers the actual business actions. It also covers errors and omissions and is sometimes called an errors and omissions (E&O) policy. It relieves the financial strain on the business owner to come up with the money to pay for costly mishaps.
Let’s look at some common risks faced by engineers every day.
If an engineer has a design error, there could be significant damage to the client’s product or business. This might be a miscalculation in math or another error that leads to a failure in the system. The failure will result in a claim against the engineer.
If an engineer ignores certain facts or presumptions, this can lead to a system failure. Engineers are expected to take in all necessary information when designing solutions. Negligence is a common reason for a professional liability claim.
If a client accuses the engineer of not completing the project based on contractual terms, a professional liability claim can arise against the engineering business. The engineer should do the work as the contract states, but disputes will be handled by the insurer’s legal counsel.
Engineers often work on tight deadlines and can be held liable if the project falls behind or fails due to their productivity or lack thereof. Professional liability insurance will protect the engineer from the costs of such claims.
Engineering firms must follow state and federal regulations when designing systems and products. Failure to do so can result in a professional liability claim against the engineer or its business.
If the work an engineering firm does puts others at risk, he can be held liable for a professional liability claim. Risk factors should be considered when designing systems and should ensure everyone’s safety where possible.
The benefits of having a professional liability insurance policy include:
Before you choose a professional liability insurance company to represent you, assess your coverage needs. Consider the cost of projects and ensure that you have enough coverage to meet the needs of potential claims. Shop policies around with carriers, ensuring each quote has the same coverage level to make an apples-to-apples comparison. Don’t just select a carrier based on cost; consider the coverage and the reputation of the carrier for paying claims. You want to ensure that they will be there for you when it matters.
Check with any professional associations that you belong to. You may be able to get recommendations of coverage and discounts on policies for your membership. Some states may require a policy based on regulations for engineers. Be sure to check with local officials to see what is required.
A professional liability insurance policy for engineers will protect you and your employees from costly mistakes on the job. Check out the best policies by reading our best professional liability insurance policies round up.
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