Professional Liability Insurance for Engineers and Draftsmen
Professional engineers and draftsmen are counted on to provide quality design services to their clients. They are expected to deliver plans, specifications and other instruments of service that result in successful projects. These services are expected to be free of errors or omissions and delivered on time and within budget.
Unfortunately, error-free projects are rare. Clients become upset and often file claims against professional engineers or draftsmen maintaining they did not comply with their contract agreement. Fortunately, engineers and draftsmen can protect themselves against error and omission claims with Professional Liability (PL) Insurance.
Necessary Coverage
Professional Liability Insurance – also known as Errors and Omissions (E&O) Insurance – provides protection for engineers and draftsmen in the event a claim is made against them by a client or third-party who alleges damages due to the consultant's failure to perform its services in a satisfactory manner. The PL Insurance policy typically covers, up to the policy limit, both the cost to defend the design consultant and any monetary damages awarded to the claimant due to the consultant not performing up to the prevailing standard of care.
Professional Liability Insurance premiums are typically paid annually and cover the engineer/draftsman for a one-year term. The policies are written on a claims made and reported basis. That is, generally, the claim must be made by the claimant and reported to the insurer within the policy year in order (plus any extended reporting period) for coverage to be in effect.
PL Policies will cover a consultant's work back to the earliest date of continuous PL insurance coverage. For example, if a professional engineer has maintained continuous PL insurance since 2001, then his or her current policy will likely cover any new claims brought against any work performed since the policy inception date in 2001. If the PL policy is cancelled or not renewed and continuous insurance ceases, then the consultant can lose coverage for all previous work unless prior acts coverage can be secured on a new policy.
Typically, PL policies are written in increments of $1 million of aggregate limits, with deductibles available on a per-claim basis, starting at $1,000. Policies may exclude coverage for specific acts and services. Specialist insurance agents can help ensure you are purchasing adequate protection from a reputable carrier.
Who Needs PL Insurance?
Virtually any professional engineer or draftsman can benefit from the coverage provided by Professional Liability Insurance. Indeed, some clients demand that their design consultants maintain a minimum amount of coverage.
No set of design plans are perfect. Errors and omissions – perceived or actual – will occur. Professional Liability Insurance can provide for the legal representation you need to defend yourself against claims of alleged errors and omissions as well as the financial resources necessary to pay any settlement or judgment against you.
