Whether you’re building a bridge or designing an electric generator, an engineer’s work involves a high degree of risk. If something goes wrong, it’s you that’s held responsible. From allegations of professional negligence to poor project management, such a high-risk profession demands that you find the right protection.
Professional indemnity insurance (PII) protects you from these risks. It protects you against financial losses if you end up facing a claim for negligence, in or out of court. It will also cover legal and defence costs, court costs, PR costs and compensation awarded to your client.
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Any engineer will tell you that very little goes to plan on the jobs and projects they work on. Whether you're having issues with your design or you're being let down by a sub-contractor, there are risks around every corner.
The most common risk engineers face is a breach of duty. This can include:
- A design fault or omission
- Negligent advice
- Failure to advise
- Contractual issues/breaches
These allegations can manifest in a claim such as:
- Professional negligence
- Inadequate design or specification
- Poor project management
- Incorrect certification
- Time delays in project completion
- Property damage and personal injury
- Loss of property value
Professional indemnity insurance
Professional indemnity insurance is a requirement for all engineers. Because you’re considered to be an “expert” with a “duty of care”, it is a legal requirement that you have PII. This is because if it is ever claimed that you have neglected your duty of care (e.g. provided incorrect advice on a project), the people affected may be able to claim damages against you.
More than that though, PII ensures that your assets are protected in the case of a costly claim. It covers you for the advice you give and protects you should you become legally liable for costs as a result of any actual or alleged negligent act, error or omission. Put simply, PII gives you protection should you make a mistake, relieving you of the financial strain of having to defend yourself.
Case study: Claims example to consider
Take this example, for instance.
It was alleged that an engineering firm failed to properly check its calculations on an enclosed glass atrium before approving the start of a large construction. As a result of the miscalculations, welds in the atrium didn't meet load requirements. The alleged cost of fixing this problem – around $3 million – more than justifies the need for PII.
Public liability insurance
This is another essential. It protects you from financial losses arising from a claim of accidental injury or property damage. Claims can be made for anything from a slip or fall in the workplace to serious injury or death. Accidents inevitably happen which is why it’s always best to be covered.
There are a few things to be aware of if you are an engineer.
- Business activities. Failing to adequately disclose the extent of your business activities can affect your cover in an insurance claim. Similarly, if there is any change in your business activities, let your insurer know.
- Your retroactive date. When changing policy, make sure your retroactive date on your new policy matches your old one to avoid any gaps in insurance cover.
- Check your policy exclusions and limits of liability. Policies often have a sub-limit which may only entitle you to a small portion of the claim.
- Group policy. Choosing this policy often means that clients do not have their own full limit of liability so other members may exhaust the amount you can claim.