Professional Liability/Errors and Omissions Insurance Coverage for Engineers
Loss exposures and claims for engineers from professional liability usually come from a contractual tort related basis. While all professionals do face potential claims or losses from a criminal liability standpoint that type of protection usually is not covered under professional liability policies.
As is the case in all negligent claims in United States there must be a legal duty that is owed to someone and there has to be a breach of that duty that results in damages or injuries and there has to be a connection or causality between the breaches in the proximate cause of loss.
Risk levels vary depending upon the type of engineering work that is being performed. An electrical engineer who is designing electrical systems for buildings typically has less exposure and thus less premiums that are paid for professional liability insurance, then compared to a structural engineer.
Some risk control techniques that engineers can use to limit their loss exposures are as follows:
- Have formal written policies and procedures in place for workflow and risk evaluation.
- Keeping adequate details and complete records of all projects, consultation, and meetings with clients will help if I claim should arise.
- Having appropriate schedules, PERT charts, and reasonable timelines can help keep projects on track and possibly foresee upcoming problems.
- All change orders or modifications must be in writing with the appropriate sign off from all affected parties within the project.
- Peer reviews within their own company and maybe having the ability to have peer reviews within their engineering association or other engineering firms that they have contact with.
- Having protection built into their contracts that provide hold harmless agreements, arbitration clauses, and other contractual verbiage that limit the engineer’s exposure to loss can go towards greatly reducing the risk of your professional liability claim.
- Incorporating loss control techniques that go towards preventing losses as well as reducing the quantity of losses and the severity of losses can help and keeping the insurance premiums low as well as advert unwanted lawsuits and litigation.
- Finally, the engineer professional should seek out insurance carriers for the professional liability coverage that specialize in the engineering profession. If the engineer has an insurance policy that is tailor-made for the specific engineers type of products and services, that will go a long way in filling any gaps that any engineer might face from future litigation from a project that they have done.
Engineers need to be careful in how the insuring agreement and clause is written within the policy. Sometimes insurance carriers exclude joint ventures and partnerships and other entities and only cover the named professional. Some design professionals desire and need much broader named insured coverage than just coverage for the professional. As is common in most professional businesses, professionals tend to come and go on a regular basis. Having the ability to have an insurance policy that can cover past, present and future claims is important so that the engineer and their firm has no gaps in coverage’s.