Why do Architects and Engineers need Professional Liability Insurance?

/ BLOG

Why do Architects and Engineers need Professional Liability Insurance?

Sep 24, 2021 · 9 minutes to read

If your business involves building or designing buildings, then Architects and Engineers (A&E) Insurance is quite simply something you cannot afford to be without. It should also be carefully considered by general contractors, surveyors, and construction managers.

But what exactly is A&E insurance? Let’s take a closer look at these policies, the protections they provide, and why you should consider having a policy.

What is Professional Liability insurance?

Architects and Engineers (A&E) insurance is a form of Professional Liability insurance designed specifically for members of these occupations. It helps protect against risks common to the architecture and engineering industries.

Professional liability insurance for architects and engineers protects your business against claims of negligence, misrepresentations, or mistakes. Professional Liability claims are typically made by clients who allege some form of financial damage as a result of your services, products or employees.

Confusion sometimes arises as to whether Professional Liability insurance and Errors and Omissions (E&O) insurance are the same thing. For architects or engineers, Professional Liability insurance and E&O insurance are effectively the same things under different names.

What does Professional Liability insurance cover?

Many professionals may have General Liability policies, which provide coverage against personal injury or damages to property, but these policies will not cover you in the event of your having made an error.

Professional Liability policies provide coverage against certain types of liability claims. These policies can cover you against claims including negligence, accidents, errors, breaches of duty, misleading statements, or poor service.

Most Professional Liability insurance policies will include:

– Coverage for legal expenses: These policies provide cover for court costs, fees for attorneys, fees for mediation, and any penalty, settlement, or judgement found against you.

– Limited liability coverage: Liability should be capped in this policy to the maximum fee for the designer in some areas to prevent gaps in coverage as a result of any implied warranty or guarantee.

– Risk management advice: Many insurance companies may provide the opportunity to have contracts reviewed, will keep you informed about liability matters, and give other advice regarding the way that risk exposure can be mitigated.

Related: What does Professional Liability Insurance Cover?

What is not covered by Professional Liability insurance?

Professional Liability insurance for architects and engineers often contains a number of conditions excluding various claims. These include claims arising from: any intentional act; legal transgressions; claims made by one party insured by the policy to another insured on the same policy; acts of dishonesty; acts of criminality; employment liabilities; liability assumed by contract; and faults in workmanship.

Architects and engineers also need to know that there may be gaps in Professional Liability policies with certain types of projects. One of these is “design-build” projects, where architects and contractors work alongside each other throughout the entire project. This is a good way of getting building projects finished quickly, but this type of project is known as having a higher level of Professional Liability claims.

Another area in which professionals, particularly engineers, should be cautious is in the use of novel technological solutions. A lot of new technologies can be exciting and money-saving, but with unproven technology a tiny error in code could lead to disaster.

Finally, you also need to think about where you are operating. Different countries have different regulations for liabilities, and even if your policy states that it provides global coverage it may only pay out on liability as defined by US law.

Professional Liability claims examples

It is vital that all professionals should be aware that even when they have done their utmost to follow best practice, they may still be liable for damages. Below are some examples of the types of claims that may be faced by architects and engineers.

Scenario one: An architect designs a new school, but is unaware that the accessibility requirements for schools have recently changed and are now different from other public buildings. The architect must appear in court after the school is cited for code violations.

Professional Liability insurance protects architects against claims of negligence, even if they haven’t made a mistake.

Scenario two: An architect and a designer are working together on a project for a mutual client. The designer misinterprets the architect’s renderings and orders expensive materials which won’t work with the plans. The mutual client is upset and sues both the architect and designer for professional negligence, demanding that they be reimbursed for the unusable materials. The architect does not believe this is their fault, but they have been named in the lawsuit and must appear in court.

Professional Liability insurance will help cover the cost of an attorney and any judgements or settlements they are ordered to pay if they are found to be at fault.

Scenario three: An engineer’s design has a flaw. Because of this it is necessary for the builder to tear down his work and start over. The client sues the engineer for the cost of new materials and labor to rebuild the part of the project that is damaged by their flaw.

Professional Liability insurance will cover this claim up to the limits of liability.

Why do architects and engineers need it?

Legal liabilities for architects and engineers can extend for decades beyond the completion of a project. If you are an architect or an engineer you are not selling a product that has a shelf life, you are offering professional services and the consequences of any errors or omissions may only emerge years later. If they do, you will be highly relieved to have taken out A&E Errors and Omissions insurance.

Architects and engineers can find themselves on the wrong end of lawsuits for many reasons. These include (but are not limited to) making human errors, not providing services as per contract, misunderstanding or transgressing building codes, or not calling in expert help when required.

It’s only natural for every architect and engineer to believe that they won’t really need Professional Liability insurance. After all, you wouldn’t be in the profession if you believed yourself to be incompetent, would you? However, even the most expert and practiced architects or engineers can find themselves subjected to claims for errors and omissions or negligence. The right Professional Liability insurance policy will help defend such claims by paying legal costs, settlements and judgements if the case is lost.

Is Professional Liability insurance required by law?

The majority of states do not mandate Professional Liability insurance for those who work in the building industry, although federal law often makes it compulsory for any architect or engineer who wants to work on a government contract.

However, most companies and individuals putting contracts for design out to tender will demand that those they are working with have Professional Liability insurance. This generally applies to all types of projects including residential, industrial, or commercial. Increasingly it is the case that the law is somewhat irrelevant, as a professional will be unable to secure a contract without Professional Liability insurance.

Do I need my own policy if I work for an architecture or engineering firm?

Generally, companies in the architecture or engineering industries will buy a Professional Liability to cover all its workers. However, some companies may decide that this is an unnecessary expense. In this case, the individual architect or engineer may consider taking out their own insurance.

Obviously, any engineer or architect setting up a business for themselves will want to organize their own coverage to protect themselves and their employees.

Which Professional Liability policy should I get?

What type of policy you and your company require will depend upon your areas of specialization. The majority of engineers and architects tend to work on a range of projects and will want to choose a policy reflecting that range.

You may also need to consider the size of contracts you take on and your business’ annual revenue. The amount of Professional Liability coverage you ultimately need will depend on these factors, as you will want to be sure your business is adequately insured.

How much does Professional Liability insurance cost?

The cost of Professional Liability insurance varies. Insurance companies use a number of factors to help calculate the premiums you will pay, and your circumstances will likely be different from other professionals or firms (even those in your area).

Some of the factors used to determine Professional Liability premiums include, but are not limited to:

– Your annual revenue

– Business location

– History of similar claims

– Your risk management procedures

– The amount of coverage you need or want

In order to avoid the rising premiums that inevitably follow any insurance claim, it is best to try and avoid liabilities where possible. Always make sure your client knows what services they are getting and what you will not be able to provide them. Write everything down and always document every meeting. Have contracts written on AIA contract forms, and if there are difficult decisions to be made, ask the client to sign off on them and acknowledge that they have done so. If your client decides to complain, handle their complaint proactively, and have a mediation clause included in your contracts in case anything goes wrong.

However, no matter how careful you and your staff are, you cannot totally shield yourself against liability claims. It is essential that you have adequate insurance in place should they arise. Find out more about Professional Liability insurance for architects and engineers.

 

 

Disclaimer:

*As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. The information contained on this web page is general only and should not be relied upon as advice. 

Compare quotes in minutes with no obligation to buy

Get Quotes

Compare quotes in minutes with no obligation to buy

More than 6,000 customers covered by top-rated insurers.

Get instant quotes
Noa made sure I had all the information I needed for a first time business owner . He helped me understand what I needed to secure a quality policy and he was super helpful when explaining how the policy would serve its purpose to my company. I was very satisfied and had an Awesome experience, I think people like that make the company look good!
Wayleen Ortiz
Wayleen Ortiz
04:36 15 Oct 21
Julia Georges-Louis
Julia Georges-Louis
22:28 29 Sep 21
I was in need of WC, GL and PL coverages for my business and was able to shop, discuss, confirm and purchase all the coverages in two days! This was a great experience, especially when "Time is Money". Noah Bowman was very professional and knowledgeable. Thanks!
AmeriCreed 1776
AmeriCreed 1776
15:42 23 Sep 21
MOVING FORWARD, I WILL BE SENDING ALL OF MY BUSINESS TO THIS COMPANY !!!! Incredible customer service!!! Thanks
THEODORE WELLS
THEODORE WELLS
19:49 09 Sep 21
Daniel Patrick Sullivan
Daniel Patrick Sullivan
16:49 07 Sep 21
Their representative clearly explained different kinds of policies to help me select the one appropriate for my needs and then helped me enroll by phone painlessly. By the end of the call, I had a policy in place.
Dissent Doe
Dissent Doe
22:21 02 Sep 21
Sheree Williams
Sheree Williams
19:39 27 Jul 21
Eugene was Awesome!!!!
Lakesha G
Lakesha G
17:19 21 Jul 21
Excellent solution for writers and authors professional liability policy as well as coverage for copyright and trademark infringement. Service was prompt and excellent.
Lane
Lane
18:22 22 Jun 21
Jugrid Ombisi
Jugrid Ombisi
16:26 15 Jun 21
Done in less than an hour!
William Opperman
William Opperman
00:30 02 Jun 21
Efficient, and great value. The agent was able to give us a quote and a new policy in a short period of time. Thank you
Brenda Jones
Brenda Jones
20:30 24 May 21
I had a great experiencing obtaining several of my insurance needs as a landscaping company here in Northern Colorado. BizInsure's team took care of my needs and was very responsive to help with paperwork needed to secure a potential client account!
Arik Solberg
Arik Solberg
16:34 10 May 21
Adj Ako
Adj Ako
16:47 05 May 21
Very efficient they were able to help me out with my request promptly....highly recommend this companyI am very happy to have them
Elba Perez
Elba Perez
18:50 26 Apr 21
I need a help getting errors and omissions insurance along with general liability. Jose was very friendly informative and was very patient with me during the process. He found me some of the best rates for the coverage that I needed. Highly recommend
Casper Martinez
Casper Martinez
19:51 20 Apr 21
I had numerous conversations with several business insurance agents over a month's time. I also had several conversations confirming the policy inclusion/exclusions and asked many questions. My BizInsure agent was professional, knowledgeable and most important—detail oriented. Even after having an initial conversation a month earlier he knew and *remembered* all my personal/professional insurance needs. When I asked for additional information on the third call he was able to provide me with details very quickly. He was also VERY patient. That is a big plus in my opinion. It illustrated a high level of respect for my needs. I also found when I called back and asked to talk with the initial agent, the person who answered the call was able to get in contact quickly and my agent responded and returned the call within 5-10 minutes. The transaction was smooth, and I think it's a good sign should I ever need to make a claim. I highly recommend BizInsure.
Poetic Films
Poetic Films
21:00 07 Apr 21
Sandra Darjean-Murphy
Sandra Darjean-Murphy
17:48 31 Mar 21
Jusephine Ghong
Jusephine Ghong
17:58 23 Mar 21
The rep was extremely helpful actually lowered my quote and made sure I was covered to fit my needs with my growing business! 5star!!
Franklin Behm
Franklin Behm
19:04 16 Mar 21
Excellent service and prices.
Cassiopée V Lapierre
Cassiopée V Lapierre
23:13 09 Mar 21
S & S Professional care llc Home Health Agengy
S & S Professional care llc Home Health Agengy
04:15 24 Feb 21
Mr. Daniel Scott was very responsive to my professional needs.
Stephanie Woodruff
Stephanie Woodruff
17:38 18 Feb 21
Eugene deserves a raise! First time purchasing insurance and he made the process so simple for me. His patience and attention to detail left me feeling confident in my decision to choose BizInsure. Gracias Eugene!
Esined Perez
Esined Perez
23:32 17 Feb 21
DIVINE FIJIANS HOME CARE SERVICES
DIVINE FIJIANS HOME CARE SERVICES
22:49 05 Jan 21
The customer service provided by Jose was outstanding. He explained everything in a very clear/logical way and answered all of my questions. After providing all the information to obtain general liability insurance, Jose sent me the declaration page of the insurance for review. All of the information matched what I provided over the phone and there were no typos. The next day I called back to purchase the insurance which was easy and fast. Overall, my experience with BizInsure including the customer service by Jose exceeded my expectations.
Joe Wajdula
Joe Wajdula
03:29 12 Dec 20
Hiscox/BizInsure made getting Liability Insurance very easy and reasonable.I expected it to be a long and complicated process and it was a nice surprise that they made it so uncomplicated. Thank you. Lisa
Lisa Word
Lisa Word
21:51 24 Nov 20
Eugene was incredible. I called 4 other brokers before him who were impossible to get any help.
rhonda hale
rhonda hale
23:26 12 Nov 20
Owner (LPN)
Owner (LPN)
23:19 06 Nov 20
Cincere Browdy
Cincere Browdy
15:16 29 Oct 20
Very quick to get in touch with you and good with follow up. Had some trouble retrieving my quote to log into my account initially but Daniel assisted me and the changes were made to get me into my account. Great value for the money.
Fran Sutton
Fran Sutton
16:34 20 Sep 20
Very happy to be insured with this company. Professional, Timely, very helpful. Thank you Juan, you made it so much easier for me to understand.
Aileen Day
Aileen Day
19:55 15 Sep 20
This company responded when I needed them to respond while facing a deadline. They are an excellent choice for business Insurance.
Michele Harris
Michele Harris
01:52 12 Sep 20
Jose Quintero took such great care of me and was very patient explained everything I did not understand and got me set up quickly. Fabulous customer service
Christina Rose
Christina Rose
02:41 27 Aug 20
I can't say enough good things about Daniel Santos kind and effective communication skills as an insurance agent. Daniel was so pleasant, friendly and efficient with helping me obtain insurance as a teacher. If I were to give Daniel a grade, he has earned an At . He made the process easy to understand, it was far easier than what I anticipated. Nancy S.
Nancy Sloan
Nancy Sloan
00:47 26 Aug 20
I was in need of professional liability insurance for my sole proprietorship. A friend referred me. Everythng was quick and simple and AFFORDABLE!
hope jones
hope jones
20:31 25 Aug 20
If you need Private Home Care Provider insurance for your company, BizInsure, LLC can get it for you!
Pamela Curry
Pamela Curry
16:45 24 Aug 20
Cameron Peek
Cameron Peek
19:25 24 Jul 20
Great and fast service!!!! The representative was very professional!!!!
Tanya Sweet
Tanya Sweet
19:51 14 Jul 20
I was tryi9ng to find commercial liability insurance for my new comp-any and BizInsure was easy to use and very affordable which is great for me as a new business.
Jimmy Smith
Jimmy Smith
19:01 14 Jul 20
Great service, but they're also extremely patient. I called over a month ago for specialized E & O coverage, and Bizinsure was able to put me in touch with an extremely reasonable quote. Absolutely invaluable time and monetary savings to be had by going through these folks. If you can-- ask for Anthony. Absolute gem of a human.
James Lang
James Lang
18:19 02 Jul 20
Ken M
Ken M
23:21 28 Jun 20
Great service insurance prices are great for professionals looking to get insurance for businesses....
Rhonda Gray
Rhonda Gray
22:34 22 Jun 20
The provided very professional service and made the process easy.
Paul Rising
Paul Rising
21:51 04 Jun 20
Bradley Hoyle from the Biz Insure team was excellent to work with. Everything was quick and smooth. Great service, much appreciated!
Kristene Smith
Kristene Smith
02:03 04 Jun 20
Anthony Spencer was great!! Very quick response time!! He was very Professional! I would suggest him because he helped me find a affordable rate and explained all the technicalities..
Fre Hall
Fre Hall
16:38 28 May 20
I was referred to Bizinsure by a industry trade group that I am a member of. It was easy to get a quote online and then received excellent customer service from Bradley H. to complete my policy purchase over the phone. I have shared this company information now with other business owners for their policy needs.
Dawn Torres-Gale
Dawn Torres-Gale
22:11 08 May 20
This company was very precise with explaining services and made sure I chose the right business insurance coverage, great customer service at purchasing.
Nekeisha B.
Nekeisha B.
01:30 05 May 20
Amazing
Jasmine Q
Jasmine Q
14:31 02 Dec 19
Trish is the most patient, professional and understanding insurance agent I’ve ever worked with. Trish has taken care of all my business insurance needs for the last couple years. I am really happy that I found an insurance agent that I know will take care of me & all of my concerns. I feel like a valued customer & I appreciate the great customer service that I get every time!!THANK YOU!
Dr. Youssef C. Atallah
Dr. Youssef C. Atallah
17:21 14 Nov 18
Tricia helped me get insurance for my business. The task of obtaining a quote was really starting to frustrate me until I was referred to BizInsure through a different agency. Tricia got me a quote fast, and even took a down payment over the phone and issued the proof of insurance the same day. a+ service, would do it again in a heartbeat!! Thank you!!
Josh Mariscal
Josh Mariscal
18:07 22 Jun 18
BizInsure was a great find! I did not have to fill out applications, and Tricia was able to quote and bind business insurance for me within half an hour.
Allison Young
Allison Young
17:28 21 Jun 18
Started doing business again and needed a policy fast. Ramez was reasonable, helpful and the rates are OK. Buyer beware? Sure, for me it turned out OK this time. Worth a call.
Mark Wallace
Mark Wallace
23:42 13 Nov 17
Daniel Scott
Daniel Scott
15:15 27 Jun 17
Great customer service. I've been very inpressed with my dedicated representative that had helped me navegate my insurence needs. Thanks so much!
Graham Blair
Graham Blair
22:12 23 Jun 17
js_loader

Popular Searches