As an engineer or architect, you work in a highly skilled, detail-oriented industry and are expected to provide quality design services that are free of errors or omissions. Despite your expertise, knowledge and best intentions, the reality is that not all projects are error-free, and eventually a mistake or misjudgment is bound to occur.
Even the smallest error can have serious consequences. If a client believes damages are due to a mistake on your part, he or she can sue your company. It is important to protect yourself against this potentially devastating liability.
How does the policy work?
A professional liability policy will cover the cost of defending you or your company in court, along with any monetary damages awarded to the claimant due to an error or omission on your part (up to the policy coverage limit).
These policies are known as “claims-made” policies. This means that coverage is triggered when a claim is filed and you report it to the insurance company, since it is often hard to identify when the alleged error or omission originally occurred. Your work will be covered dating back to the earliest date of your continuous professional liability coverage.
Policies typically have a one-year term, with an annual premium and deductibles on a per-claim basis.
What to look for in a policy?
Though you may specialize in certain areas, you likely handle a variety of projects and services, and you’ll want your policy to reflect that.
Depending on your needs, you may want to consider these components when choosing a policy:
- Pollution liability that covers sudden, accidental and gradual pollution
- Specific coverage for breach of a client contract
- Full civil liability coverage (not just negligence)
- Specific coverage for breach of intellectual property rights
- Reimbursement of costs incurred to help reduce or avoid a claim
- Punitive and exemplary damages coverage
- Virus and hacking liability coverage
What if I use subconsultants on my projects?
In this situation, it would be best to have a separate policy for vicarious liability coverage. This can be beneficial to you in the long run to mitigate vicarious liability should an error or omission occur from the work a subconsultant performs while working on your project.
Therefore, it is best to work with a professional insurance broker to help you determine the exact numbers and select the policies that will best protect your assets.
Find out more:
The cost of defending yourself in court can be huge, not to mention the restitution costs if you’re found at fault. Therefore, having proper professional liability and vicarious liability policies in place will help cover these costs in the event of such claims, which may otherwise financially cripple your business.
Download our free guidebook “Avoiding Vicarious Liability from Subpar Subconsultants” here to get all the details on how you can further protect yourself from liabilities: