Engineering Insurance

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Engineering Insurance Policy Information

Engineering Insurance

Engineering Insurance. Engineers use higher mathematics, economics, biological, and physical sciences to design airports, bridges, buildings, highways, products, and railroads. The engineer is hired by a client and may conduct research, prepare prototypes, or design specifications to meet the client's requirements. They may test process failures to identify problems and propose solutions. Engineers may specialize in chemical, civil, electrical, industrial, or mechanical design.

Related to engineers are the services offered by architects. Often engineering operations have architects on staff or other contractual associations with architectural companies.

If you own your own engineering business, then buying the right level of insurance for your business - including a BOP, or business owner's policy - is a crucial part of doing business. This type of policy protects your small business in many of the same ways that your homeowner's insurance protects your home. While the homeowner's policy protects your home and the stuff inside it, the BOP policy protects your business, your equipment, inventory, and more.

A engineering insurance business owner's policy can provide you with protection if you find yourself on the receiving end of a lawsuit.

Engineering insurance protects your firm from lawsuits with rates as low as $27/mo. Get a fast quote and your certificate of insurance now.

How Much Does Engineering Insurance Cost?

The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small engineering businesses ranges from $27 to $49 per month based on location, size, payroll, sales and experience.

What Type Of Insurance Do Engineers Need?

A BOP policy for engineers is essentially a coverage bundle that meets the needs of any small business. However, your business may have unique needs that go beyond the norm. There are many, many types of riders and add-on or addendum policies that you can purchase to make sure you are protected from a 360-degree angle. Some of the most popular include:

  • Accounts receivable insurance coverage. As an engineer, there's a good chance that you work on projects that span several months or even go on for years. This type of receivables accounting can constitute a large number of your firm's assets. If those records are destroyed some way, whether by fire, water, or some other peril, you can be out a great deal of money to recoup them. This insurance provides a protective buffer against such an occurrence.
  • Coverage for computers and media. You likely rely on your firm's computer system and special software to stay in touch with your clientele, discuss specs, share goals, and exchange quality control information. If a virus makes its way into your media, causing a network crash and corruption of your data, then this type of coverage pays for the research required for replacing such data.
  • Valuable papers coverage for engineering businesses. The types of records your business creates and subsequently stores are sensitive. Site tests, minutes of meetings, change orders, and so forth, are all valuable to the operation of your business. Should water, fire, or additional perils damage these records, then you can file a claim under this type of engineering insurance policy rider to recoup the research costs to recover the lost information.
  • Data breach coverage. Your business should also consider data breach coverage. The press has been very thorough in decrying the data breaches that businesses experience. Your business could suffer immensely if clients' confidential information is compromised. This type of coverage helps not only to save your reputation and restore client confidence, but it also helps to pay any damage claim resulting from data breaches.

These are some basic coverage types. Your engineer business may need even more specialized coverage. There are specific types of insurance that may be necessary based on the size of your firm. For example, worker's compensation insurance is sometimes required by the state when you have employees; this coverage protects your workers if they are injured or become ill due to a job-related cause. In addition, some businesses may need commercial auto insurance. If you use a vehicle in the course of running your engineering business, then a commercial auto policy can protect your assets if you are ever sued by someone who claims you injured them or caused damage to their property while operating a business vehicle.

Each business' insurance needs are unique. Discuss your particular situation with an agent who is adept at finding the right cover and level of protection for you - whether that's an engineering business owner's policy or some other type of comprehensive coverage.

What Is An Engineering Insurance Business Owner's Policy (BOP)?

Engineering Services

This engineering insurance combines three basic coverage types into one policy, making it easy to choose the coverage level that your business needs and stay protected without a lot of research into specific policy types. The BOP policy can protect your professional engineering firm from the perils faced by all businesses and from perils unique to your trade. This policy offers your business:

  • Business liability insurance. This insurance provides a buffer against specific lawsuits that allege your business is responsible for bodily injury or property damage due to the operation of the business. For example, if a customer becomes injured at your place of work or if an employee on the client's jobsite becomes injured or damages the client's property, this insurance kicks in to cover the damages. It may also cover you from libel and slander charges in some instances. However, it does not cover any liabilities that arise directly from the professional engineer services that you offer.
  • Business property insurance. This type of insurance protects the business' physical location and the items stored or maintained within. For instance, your equipment, tools, and furnishings are protected under business property insurance, regardless of whether you own them or lease your equipment.
  • Business income insurance. Most engineering insurance BOP policies come standard with a business income rider. This type of policy covers the loss of your business' income when you are unable to serve the clientele you normally serve due to claims of covered damage to your property.

Engineering Service's Risks & Exposures

Engineers At Work

Premises liability exposure is limited due to lack of public access at the office location. If clients visit the premises, they must be confined to designated areas. To prevent slips, trips, or falls, all areas accessible to the public must be free of obstacles with floor coverings in good condition. The number of exits must be sufficient and well marked, with backup lighting in case of power failure.

Parking lots and sidewalks need to be in good repair with snow and ice removed, generally level and free of exposure to slips and falls. Off-site exposures consist of visits to customers' premises and to job sites. There should be procedures in place for enforcement of rules regarding off-site conduct by employees.

Professional liability exposure is extensive due to the catastrophic potential for injury and death due to an error in design that results in structural or process failure, such as the collapse of an interstate or high rise. The exposure increases if the firm fails to conduct thorough background checks to verify employees' accreditations, education, and licensing, permit clerical workers to do tasks that only professionals should handle, or if error checking procedures are ignored or are inadequate.

All design specifications must be followed and inspections regularly conducted. Documentation must be clear, with changes marked and authorizations signed by both the engineer and the customer. Customers can suffer financial loss due to construction delays and cost overruns.

Workers compensation exposure is from office operations and off-site visits to customers' premises. Since work at the office is done on computers, potential injuries include eyestrain, neck strain, carpal tunnel syndrome, and similar repetitive motion injuries that can be reduced with ergonomically designed workstations. Off-site exposures may include working at construction sites, at heights, on rough terrain, or in isolated areas. Engineers can be injured off-site by slips and falls, falling objects, falls from heights, electrical panels, and wiring, construction machinery, flying debris, noise, and automobile or aviation accidents. Protective equipment may be required.

Property exposure is primarily that of an office, although there may be some incidental storage or an area for meetings. Ignition sources include electrical wiring, heating and air conditioning systems, wear, and overheating of equipment. The storage of customers' records may add to the fire load. Storage should be in fireproof file cabinets, and fire suppression systems must not damage the papers. Computers and other electronic equipment may be targets for theft.

Crime exposures are from employee dishonesty. Ordering, billing and disbursement duties must be separated and regular audits performed. Employee dishonesty issues may arise when an employee is on a client's premises. Background checks should be conducted before permitting any employee to visit clients.

Inland marine exposure consists of accounts receivable if the firm offers credit, computers, and valuable papers and records for clients' information, product proposals, prototypes, final specifications, and work in progress. The computers generally have expensive hardware and software designed specifically for engineering applications. Power failure and power surges are potentially severe hazards.

Computer systems must have adequate security features to prevent unauthorized access due to industrial espionage or by hackers. Duplicates must be made often and stored off site. Storage on premises should consist of fireproof cabinets. There may be an off-premises exposure if engineers take tools and equipment to customers' job sites.

Commercial auto exposure is from the vehicles used to travel to visit customers and to job sites. Generally, the vehicles are private passenger types or pickups. If vehicles are supplied to employees, there should be written guidelines regarding the personal and permitted use of the vehicle. All drivers must have appropriate licenses and acceptable MVRs. Vehicles must be maintained and records kept in a central location.

Commercial Insurance And Business Industry Classification

  • SIC CODE: 8711 Engineering Services
  • NAICS CODE: 541330 Engineering Services
  • Suggested ISO General Liability Code(s): 92663
  • Suggested Workers Compensation Code(s): 8601

Description for 8711: Engineering Services

Division I: Services | Major Group 87: Engineering, Accounting, Research, Management, And Related Services | Industry Group 871: Engineering, Architectural, And Surveying

8711 Engineering Services: Establishments primarily engaged in providing professional engineering services. Establishments primarily providing and supervising their own engineering staff on temporary contract to other firms are included in this industry. Establishments providing engineering personnel, but not general supervision, are classified in Industry 7363. Establishments primarily engaged in providing architectural engineering services are classified in Industry 8712, and those providing photogrammetric engineering services are classified in Industry 8713.

  • Designing ship, boat, and machine
  • Engineering services: industrial, civil, electrical, mechanical
  • Machine tool designers
  • Marine engineering services
  • Petroleum engineering services

Engineering Business Specialties

Chemical engineers use chemistry and chemical reactions to design machinery or industrial plants that manufacture chemically-based products. They may work in newer fields such as nanotechnology, or invent new processes. The engineer is hired by a client and may conduct research, prepare prototypes, or design specifications to meet the client's requirements. They may test process failures to identify problems and propose solutions.

In chemical engineering, errors and omissions exposure is extensive due to the catastrophic potential for injury and death due to an error in design that results in the release of pollutants, toxins, or known carcinogens into the air, water or land around the customers' premises.

All design specifications must be followed and inspections regularly conducted. Documentation must be clear, with changes marked and authorizations signed by both the engineer and the customer. Customers can suffer financial loss due to construction delays and cost overruns.

Civil engineers use higher mathematics, economics, biological, and physical sciences to design airports, bridges, buildings, highways, manufacturing plants, and railroads. They may specialize in construction, environmental, forensic, geotechnical, hydraulic, municipal, or transportation fields. The engineer is hired by a client and may conduct research, prepare prototypes, or design specifications to meet the client's requirements. They may test structural failures to identify problems and propose solutions.

In civil engineering, professional liability exposures are large due to the big potential for injury and death due to design flaws that result in structural failures. Imagine a bridge collapsing with cars on it.

All design specifications must be followed and inspections regularly conducted. Documentation must be clear, with changes marked and authorizations signed by both the engineer and the customer. Customers can suffer financial loss due to construction delays and cost overruns.

Types Of Small Business Insurance - Requirements & Regulations

Perhaps you have the next great idea for a product or service that you know will appeal to your local area. If you've got a business, you've got risks. Unexpected events and lawsuits can wipe out a business quickly, wasting all the time and money you've invested.

Commercial insurance steps in to help you manage these risks, avoiding a situation which requires you to pay exorbitant costs out-of-pocket.

Small Business Information

Insurance is so important to proper business function that both federal governments and state governments require companies to carry certain types. Thus, being properly insured also helps you protect your company by protecting it from government fines and penalties.

Small Business Insurance Information

In the business world, there are many risks faced by company's every day. The best way that business owners can protect themselves from these perils is by carrying the right insurance coverage.

The The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight.

Commercial insurance is particularly important for small business owners, as they stand to lose a lot more. Should a situation arise - a lawsuit, property damage, theft, etc. - small business owners could end up facing serious financial turmoil.

According to the SBA, having the right insurance plan in place can help you avoid major pitfalls. Your business insurance should offer coverage for all of your assets. It should also include liability and casual coverage.

Types Of Small Business Insurance

Choosing the right type of coverage is absolutely vital. You've got plenty of options. Some you'll need. Some you won't. You should know what's available. Once you look over your options you'll need to conduct a thorough risk assessment. As you evaluate each type of insurance, ask yourself:

  • What type of business am I running?
  • What are common risks associated with this industry?
  • Does this type of insurance cover a situation that could feasibly arise during the normal course of doing business?
  • Does my state require me to carry this type of insurance?
  • Does my lender or do any of my investors require me to carry this type of policy?

A licensed insurance agent or broker in your state can help you determine what kinds of coverages are prudent for your business types. If you find one licensed to sell multiple policies from multiple companies (independent agents) that person can often help you get the best insurance rates, too. Following is some information on some of the most common small business insurance policies:

Business Insurance Policy Type What Is Covered?
General Liability InsuranceWhat is covered under commercial general liability insurance? It steps in to pay claims when you lose a lawsuit with an injured customer, employee, or vendor. The injury could be physical, or it could be a financial loss based on advertising practices.
Product Liability InsuranceWhat is covered under product liability insurance? I pays an injured party's settlement or lawsuit claim arising from a defective product. These are usually caused by design defects, manufacturing defects, or a failure to provide adequate warning or instructions as to how to safely use the product.
Commercial Property InsuranceWhat is covered under business property insurance? General liability policies don't cover damages to your business property. That's what commercial property insurance is for. It protects all of the physical parts of your business: your building, your inventory, and your equipment, giving you the funds you need to replace them in the event of a disaster. If you work from home, you might consider a Home Based Business Insurance policy instead.
Business Owners Policy (BOP)What is covered under a business owners policy (BOP)? This is a policy designed for small, low-risk businesses. It simplifies the basic insurance purchase process by combining general liability policies with business income and commercial property insurance.
Commercial Auto InsuranceWhat is covered under business auto insurance? This type of insurance covers automobiles being used for business purposes. This could include a fleet of business-only vehicles or a single company car. In some cases it might cover your car or your employee's car while they're being used for business. These policies have much higher limits, ensuring you can cover your costs if one of these vehicles gets into an accident.
Commercial Umbrella PoliciesWhat is covered under commercial umbrella insurance? This type of policy is a sort of "gap" insurance. It covers your liability in the event that a court verdict or settlement exceeds your general liability policy limits.
Professional Liability (Errors & Omissions)What is covered under professional liability insurance? This type of business insurance is also known as malpractice oe E&O. It covers the damages that can arise from major mistakes, especially in high-stakes professions where mistakes can be devastating.
Surety BondWhat is covered under surety bonds? Bonding is a contract where one party, the SURETY (who assures the obligee that the principal can perform the task), guarantees the performance of certain obligations of a second party, the PRINCIPAL (the contractor or business who will perform the contractual obligation), to a third party, the OBLIGEE (the project owner who is the recipient of an obligation).


Who Needs General Liability Insurance? - Virtually every business. A single lawsuit or settlement could bankrupt your business five times over. You might also need this policy to win business. Many companies and government agencies won't do business with your company until you can produce proof that you've obtained one of these policies.

Business Insurance Required by Law

If you have any employees most states will require you to carry worker's compensation and unemployment insurance. Some states require you to insure yourself even if you are the only employee working in the business.

Your insurance agent can help you check applicable state laws so you can bring your business into compliance.

Other Types Of Small Business Insurance

There are dozens of other, more specialized forms of small business insurance capable of covering specific problems and risks. These forms of insurance include:

  • Business Interruption Insurance
  • Commercial Flood Insurance
  • Contractor's Insurance
  • Cyber Liability
  • Data Breach
  • Directors and Officers
  • Employment Practices Liability
  • Environmental or Pollution Liability
  • Management Liability
  • Sexual Misconduct Liability

Whether you need any or all of these policies will depend on the results of your risk assessment. For example, you probably don't need an environmental or pollution policy if you're running an IT company out of a leased office, but you would need data breach and cyber liability policies to fully protect your business.

Additional Resources For Professional Services Insurance

Get informed about small business professional services insurance, including Professional liability, aka errors and omissions (E&O insurance), that protects your business against claims that a professional service you provided caused your client financial loss.


Professional Services Insurance

Let's face reality. People today are claims conscious, resulting in a significant share of malpractice lawsuits against professionals.

Liability resulting from the rendering of or the failure to render professional services is excluded in most liability coverage forms. This means that a policy covering a account's or lawyers' office will cover liability arising out of the maintenance or use of the premises, but specifically exclude liability arising out of the rendering of a professional service or the omission of such a service.

In addition to the professions in which actual physical or mental injury may be caused to clients, certain other professions are exposed to claims for malpractice.

Claims may be brought against lawyers, accountants, architects, and similar professional persons for errors or omissions in their professional capacity. Errors & Omissions insurance pays damages that might be awarded to a plaintiff alleging professional negligence.

Professional liability policies are made available to such risks, and these policies provide essentially the same protection as is afforded under the physicians, surgeons or dentists professional liability policy.

Minimum recommended small business insurance coverage: Business Personal Property, Employee Dishonesty, Accounts Receivable, Computers, Valuable Papers and Records, General Liability, Employee Benefits Liability, Professional Liability, Umbrella Liability, Hired and Non-owned Auto Liability & Workers Compensation.

Other commercial insurance policies to consider: Building, Business Income with Extra Expense, Earthquake, Equipment Breakdown, Flood, Computer Fraud, Forgery, Money and Securities, Special Floater, Cyber Liability, Employment-related Practices Liability, Business Auto Liability and Physical Damage and Stop Gap Liability.


Engineering Insurance
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