It takes a lot of study and training to become an engineer. Careers in this field are highly technical, meaning there are plenty of opportunities for mistakes to happen.
A small error or innocent omission in your work may not seem like a big deal, but they can become huge headaches. Mistakes can cause costly delays, require that work be redone, or bring fines and other legal trouble to your clients. You could be found liable if this happens, meaning that your client’s headache is now yours.
This is why many in the field choose to protect themselves with engineering Errors and Omissions insurance. The coverage that this type of policy provides can be a valuable tool for professional engineers working in any industry.
What is E&O insurance?
To understand why engineers may need Errors and Omissions (E&O) insurance to protect them professionally, you may need to start with the basics: What is it?
Also known as Professional Liability insurance, an E&O policy 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.
What does E&O insurance cover?
As mentioned in the above definition, E&O insurance provides coverage for claims of negligence, misrepresentations, or mistake. However, these are not the only events that are covered by most policies. E&O insurance also protects you against claims of:
- Omissions
- Missed deadlines
- Undelivered services
- Breach of contract
These are all common liability claims for engineers, where clients rely on your professional expertise and advice to make important decisions.
If a claim is made against you, engineering Errors & Omissions insurance pays the legal expenses resulting from the lawsuit. This includes attorney’s fees, court costs, settlements, and judgements.
Why do engineers need E&O insurance?
There are many reasons why engineers consider getting an E&O insurance policy to protect themselves on the job. Let’s take a look at three common ones:
1. The nature of the job
Clients hire engineers for their professional expertise and advice. Your recommendations are often used to make important decisions and may shape the scope and progress of a project. If there’s a mistake in your work—no matter how small—it could result in a financial loss for the client.
You could be held liable for financial losses suffered by clients. If a mistake in your work causes expensive delays or requires that work be redone, a client may sue you to recoup these costs. Similarly, they could also bring a lawsuit if they are dissatisfied with your work, or you fail to deliver as promised.
Engineering Errors and Omissions insurance can help shield you from this liability by covering the legal costs associated with a claim.
2. Meeting legal and professional obligations
In some cases, engineers may be required to have E&O insurance. Many states require engineers working in certain fields to have an E&O policy to work in the state. This may be a condition for becoming a licensed engineer. Similarly, professional associations often require their members to have a minimum level of E&O insurance coverage to become licensed and work.
Having engineering Errors and Omissions insurance helps you meet these obligations and remain on the right side of the law.
3. Meeting client expectations
When clients hire an engineer, they expect to hire someone professional and who meets the standards set by their occupation. Engineering Errors and Omissions insurance shows clients that you value your professional reputation, and you are ready to defend it if necessary.
Clients may require freelance engineers to have E&O insurance to work with them. This gives clients peace of mind that if something goes wrong while working on a project, you have coverage in place to cover your potential liability. A business contract might specify if you need E&O insurance (and how much), and you may be asked to provide proof of insurance before signing the contract.
Is E&O insurance the only protection engineers consider?
While engineering Errors and Omissions insurance can be an important part of protecting yourself on the job, it may not be the only form of insurance that you need. Engineers often also consider General Liability insurance and a Business Owner’s Policy to protect themselves more fully.
General Liability insurance protects businesses against the risk of customer injury and property damage. Engineers may buy this type of policy if they regularly meet with clients in their offices or on worksites. It provides coverage if a client injures themselves on your premises or if you damage a client’s property.
A Business Owner’s Policy (BOP) is a combination of policies, combining covers such as General Liability insurance and business personal property coverage, to help protect small businesses from costly interruptions to service. Engineers may buy this type of policy as an affordable way to insure themselves against a variety of risks, including equipment breakdown and damage to their offices.
Finding E&O insurance for engineers
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