When you provide a service to the public that can result in unwanted injury or damage, it is imperative that you have the proper insurances to cover you and your business. For engineers, this is especially important since mistakes can lead to damage, injury and even death.
Thankfully, there are engineering insurance policies that will cover you should the unexpected happen and you find yourself being sued in court for damages.
Many times, these instances cannot be covered by general liability insurance. Therefore, it’s important to understand what engineering insurance is and how it can protect your business or firm.
Professional Liability Insurance for Engineers
Professional Liability Insurance (PLI) is an insurance policy that protects professionals, such as engineers, from claims initiated by clients. General liability insurance is not enough to protect engineers from claims related to business or professional practices such as negligence.
Like the engineering industry itself, professional liability insurance is diverse and varied. It should be considered whether an engineering firm is operated by a single practitioner or is a multidisciplinary firm.
Engineering insurance is similar to PLI but is tailored to the unique needs of the engineers and business. Engineering professionals who should seriously consider this form of insurance include architectural engineers, electrical engineers, architects, civil engineers, environmental engineers and structural engineers.
Professional liability insurance policies are typically arranged on a claims-made basis, covering only claims made during the policy period. These policies will protect the insured against any loss caused by claims against them. It’s important to note that PLI and engineering insurance often do not include criminal prosecution or any legal liability under civil law. As well, the policy may not cover cyber liability, data breaches and other technologically-related issues.
If you are considering engineering insurance for your firm, it’s important to speak with a knowledgeable insurance professional to determine how this coverage will protect you and your business.
Common Claims for Engineers
Insufficient Field Review
An engineer can be sued for insufficient field review in cases where damages could have been prevented by catching design flaws in time. An example of this would be if a civil engineer’s recommended excavation method for a damaged municipal drain caused a drain collapse due to inappropriate backfill processes.
This engineer could face being sued by the municipality since the backfill process could have been corrected in order to avoid damage.
Under-Design
If an engineer approves design changes in which the resulting project ends up being under-designed, they could face being sued.
This happened to an engineer who approved changes when building a small bridge that resulted in the partial destruction of one of the abutment foundations after a heavy rainfall. They were consequently sued for under-designing the bridge.
Property Damage
When an engineer’s plan and execution results in damage to the property, they could face litigation for those damages.
Case in point: A mechanical engineer’s responsibility was questioned when deficient piping resulted in water damage to a new residential building.
Design Errors
An engineer can be held liable for design errors when the design is wrong or omissions are made that result in a flaw that causes damage or undue repair. For example, an engineer can be held responsible if the design for an air-handling system contains errors and leads to costly repairs to the system.
Bodily Injury
Engineering jobs are full of physical risks but it is the responsibility of the engineer to ensure that no one is hurt during the process or injured by flaws in the design.
An engineering firm can be held accountable, for example, if they design and build a bridge that eventually collapses. They could be found at fault for damages to both people and vehicles.
How Much Money Can Engineering Insurance Save Your Firm?
Professional liability is not a form of insurance coverage to be taken lightly. The unforeseeable can always happen and the damages could have a drastically negative effect on your business.
Here are some examples of how engineering insurance can save you money and save your business:
- Roof Overhang: A newly-built residential complex alleged that the original construction and design of roof overhangs were faulty and sued the engineering and architectural firms involved. The architectural firm faced paying up to $280,000 in damages. After reaching a settlement, their insurance company was able to pay $175,000 on behalf of the firm.
- Burst pipe: A burst sprinkler pipe at a new condo-hotel project caused almost $700,000 in water damage and a claim was initiated against the engineering firm. Their insurance company investigated the incident and concluded that the standards were met regarding the pipe’s location and installation and was able to cover 100% of the legal fees for the firm.
- Slip and Fall: A woman lost her footing leaving a gym and fell down a set of concrete stairs. She sought $2 million dollars in general damages and filed a civil action suit against the city as well as the consultant who provided the building codes for the premises. The insurance company settled and contributed $40,000 on the insured’s behalf and released them from liability.
As you can see, when you have engineering insurance, your insurance provider will not only cover the costs of litigation and damages but will also advocate on your behalf if you are not responsible for the incident.
How to Handle Professional Liability Claims
If you facing a situation in which your engineering firm is being sued, your first step should be to contact your insurance provider. Because liability policies work on a claims-made basis, you could put your coverage at risk if you don’t make that call.
Need more information about engineering insurance or how to handle a claim? Our team of insurance experts are available to answer your questions and help you navigate claims made against your engineering firm.
