Engineer insurance exists to transfer risks arising from the nature of the business. As there are different types of engineering businesses, the insurance industry has come up with different policies to cover their unique risks.
Engineers and architects are in a league of their own. They breathe life into models that help societies develop. As a result, the very nature of their job demands innovation.
With each innovation, comes unique risks. Whether it be a monument or a machine, the perils they may bring about are variable and dangerous.
Engineering and architect insurance exist to transfer these kinds of risks. Let’s explore how insurance can help engineering and architecture businesses.
In this article
Defining risks for engineers and architects
Unlike other business niches, risks in the engineering industry are very diverse. Engineering outputs can range from buildings on the land to stations in the space. Therefore, each innovation can bring about unique risks of their own.
Generalizing risks among all these engineering variations is impossible. Thus, insurance businesses have tailored policies according to the demands of the job for risk management.
Who requires professional engineer insurance?
- Civil Engineer
- Mechanical Engineer
- Electrical Engineer
- Forensic Engineer
- Soil Engineer
- Environmental Engineer
- Transportation Engineer
- Aeronautical or Aerospace Engineer
- Interior Designer
- HVAC Engineer
- Software Engineer
Coverages and policies included in engineer insurance
General Liability Insurance:
General liability insurance covers you for medical bills or attorney fees arising from property damage or bodily injury. For example, you order a pizza and the delivery guy comes to your office and trips on the wiring on their way out– spraining their ankle. In cases as these, your general liability coverage will reimburse for their medical bills.
Commercial Property Insurance:
Commercial property insurance pays for any losses that may occur because of fire, theft or natural disaster. Therefore, businesses such as retailers, non-profit organizations, manufacturers and service providers get property insurance.
Business Owners Policy (BOP):
Business owners policy is a blend of general liability, property insurance, and business interruption insurance. Hence, it covers claims such as:
- Bodily injury
- Property damage
- Other claims arising from natural disasters
Carriers usually offer discounts for some policies under BOP.
Workers compensation insurance indemnifies employees who get injured in the line of duty. Specifically, it covers for lost salary and medical bills. For example, a construction worker works 6 hours a day moving goods. To meet the nearing deadline, the worker puts in 9 hours, and rips a ligament due to extra work. In this case, your workers compensation insurance can pay for their medical bills and also cover the lost income.
Professional liability insurance, also known as errors and omissions insurance, compensates for losses that may result due to the services or advice you provide to your clients. Engineers and architects are vulnerable to professional liability claims because they have to design outputs in accordance with their client’s requests. Consequently, if the clients do not get what they want, they can file a claim.
Business Income for Off-Premises Utility Services:
Business interruption insurance pays for lost revenue due to circumstances outside your control, such as a storm.
Commercial umbrella insurance covers you if claims exceed your general liability limits. For instance, say your engineering firm catches an unexpected fire. The fire engulfs the neighboring business too. In this case, your general liability policy only covers half of the damages. The other half, goes out of your pocket. However, if you have umbrella insurance, your money will never leave your pocket.
Cyber Liability Insurance:
Cyber liability insurance helps you in cases of a data breach. Client information is strictly confidential and can affect your business if not protected. CNN reported that Marriot lost $72 million after losing data of 383 million guests to data breach. What’s interesting is that Marriot collected $71 million from insurance.
Commercial Auto Insurance:
Commercial auto insurance covers the vehicles used for business purposes. According to Insurance Information Institute, the incurred losses for auto insurance in 2018 was over $22 million. The engineering business, without a doubt, has contributed a fraction to that amount. So, it’s wise to have a contingency for risks of potential losses.
Other policies you might want to buy
- Computers and media coverage: This policy pays you for lost income due to computer viruses and also for repairs.
- Accounts receivable coverage: This policy indemnifies client data records. Engineers often work on a single project for months. Therefore, the record of all these months of work is valuable.
- Equipment breakdown coverage: Equipment breakdown coverage safeguards any equipment required for the daily operation of your business. It compensates for necessary expenses for restoration, spoiled inventory, lost income, and repair costs.
- Design liability: The policy pays for property damage or personal injury caused by your design.
- Design-build: The policy compensates for harm caused by your design or output.
- Design professional liability: The policy shields you from any claims that say your designs are defective.
How much does engineer insurance cost?
As discussed before, engineering is a vast field. Since different faculties of engineering have various risks, their cost structure will vary. However, the factors that determine the cost of engineer insurance are: