Engineering Insurance Policy Information
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.
Below are some answers to commonly asked engineering insurance questions:
- What Is Engineering Insurance?
- How Much Does Engineering Insurance Cost?
- Why Do Engineers Need Insurance?
- What Type Of Insurance Do Engineers Need?
- What Does Engineering Insurance Cover & Pay For?
What Is Engineering Insurance?
Engineering insurance is a type of insurance that covers risks associated with the design, construction, and maintenance of engineering projects. This can include coverage for damage to equipment, third-party liability, and loss of income due to delays or disruptions in the project.
It is commonly used by engineering and construction companies, as well as by businesses that own and operate engineering projects such as power plants, dams, and infrastructure projects. The coverage can be customized to fit the specific needs of the project and the company.
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.
Why Do Engineers Need Insurance?
Engineers need insurance to protect themselves and their work in a variety of situations. They may be held liable for errors or omissions in their designs or calculations, which could result in financial losses or damages to their clients or the public. Insurance can help cover these costs and mitigate the risk of financial ruin for the engineer.
Additionally, insurance can provide peace of mind for engineers, allowing them to focus on their work without worrying about potential legal or financial issues. It can also serve as a means to attract and retain clients, as many companies require their contractors to have adequate insurance coverage.
Overall, insurance is an important tool for engineers to protect themselves and their work in an increasingly litigious society. It allows them to take on projects with confidence, knowing that they have a safety net in place in case anything goes wrong.
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 engineering insurance 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.
Engineering Service's Risks & Exposures
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.
What Does Engineering Insurance Cover & Pay For?
Engineers can be sued for various reasons, often related to negligence, errors, omissions, or breach of contract. Professional liability insurance, also known as errors and omissions (E&O) insurance, can help protect engineers financially in the event of a lawsuit. Here are some examples:
Design errors: If an engineer's design contains errors that lead to structural failure, they may be held responsible. Insurance can help pay for legal defense costs and any damages awarded to the plaintiff if the engineer is found to be at fault.
Construction oversight: If an engineer fails to adequately supervise construction, resulting in defects or delays, they can be sued. Insurance can help cover legal expenses and potential settlement amounts in this situation.
Breach of contract: If an engineer fails to fulfill their contractual obligations, such as not completing a project on time or within budget, they may be sued for breach of contract. Insurance can assist with legal fees and any financial settlements that arise from the lawsuit.
Failure to obtain permits: Engineers are responsible for obtaining necessary permits and approvals for their projects. If they fail to do so, they could be held liable. Insurance can help pay for legal defense and any resulting fines or penalties.
Intellectual property infringement: If an engineer is accused of infringing on someone else's intellectual property (such as a patent or copyrighted design), they may face legal action. Insurance can help cover the costs of defending against these claims, as well as any settlements or judgments.
Environmental damage: If an engineer's work causes environmental damage or violates environmental regulations, they can be held responsible. Insurance can help cover the costs of remediation, legal fees, and any damages awarded to the plaintiff.
In each of these cases, professional liability insurance can help protect engineers from financial ruin by covering the costs associated with defending against a lawsuit, as well as any potential settlements or judgments. It's essential for engineers to have a suitable insurance policy in place to manage these risks and safeguard their professional reputation.
Commercial Insurance And Business Industry Classification
- SIC CODE: 8711 Engineering Services
- NAICS CODE: 541330 Engineering Services
- Suggested Workers Compensation Code(s): 8601 Architectural or Engineering Firm - Including Salespersons & Drivers
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 Insurance - The Bottom Line
To find out exactly what type of engineering insurance you need and how much coverage you should have, speak to a professional insurance agent to go over your options.
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.
- Accounting
- Actuaries
- Answering Service
- Architects
- Armored Car
- Attorney Lawyer
- Auctioneer
- Auditor
- Background Music Services
- Bookkeeping
- Business Consulting
- Chemical Engineers
- Civil Engineers
- Claims Adjuster
- Commercial Laundries
- Commodity Broker
- Corporate Wellness
- Couriers
- Court Reporter
- Credit Bureaus
- Debt Collection Agency
- Draftsman
- Detective Agency
- Diaper Services
- Electrical Engineering
- Engineering
- Environmental Consultant
- Executive, Career & Life Coaching
- Executive Search Firm
- Expert Witness
- Financial Planner
- Financial Services
- Funeral Directors
- HR Consultant
- Inspection Bureaus
- Insurance Agents & Brokers Insurance
- Interpreter
- Mediator - Arbitrator
- Medical Billing
- Music, Drama & Dance Therapy
- Notary
- Office Machine Repair & Maintenance
- Piano Tuners
- Project Management
- Safety Consultants
- Speakers Bureaus
- Stockbrokers
- Surveyor
- Tax Preparer
- Temporary Staffing
- Title Abstractors
- Valet Parking
- Specialty Consultants
- Specialty Service Business
The professional services industry, which includes occupations such as lawyers, doctors, accountants, and architects, often deals with sensitive and complex issues that carry a high risk of liability. These professionals are expected to provide their clients with expert advice and guidance, and any mistakes or oversights can result in significant financial consequences for both the client and the professional. This is where insurance comes into play.
Business insurance provides protection against the financial repercussions of potential mistakes or accidents that may occur while providing professional services. For example, a lawyer may make an error in their legal representation that leads to a financial loss for their client. Without insurance, the lawyer would be personally responsible for covering the cost of this loss. Insurance helps to protect professionals from these types of financial burdens and allows them to focus on providing high-quality services to their clients.
In addition to protecting against financial losses, commercial insurance can also provide legal defense for professionals facing legal action as a result of their work. This can be especially important for professionals in high-stress or high-risk fields, such as doctors or architects, who may be at a higher risk of being sued for professional negligence.
Overall, the professional services industry needs insurance to protect against financial losses and legal action, ensuring that professionals can continue to provide high-quality services to their clients without the added stress and burden of potential financial consequences.
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.
