Why It’s Important for Engineers to Have an Insurance Policy

Engineering is a highly versatile profession with multiple specialties, some of which also have subdivisions. Engineers are involved in multiple stages of product development, from designing and building it all the way to testing and maintenance.

However, if an engineer makes even one mistake, it can lead to hundreds or even thousands of dollars worth of damage. Mistakes are a part of every job, and if you don’t want to be held responsible for a slip-up, you need to find professional liability coverage for engineers that will keep your projects safe and your business reliable.

Here are all of the reasons why you need to have an insurance policy if you’re an engineer.

Why engineers get sued

Engineer at work

There are many reasons why a client can choose to sue an engineer, one of the most common ones being faulty designs. Even one miscalculation that occurs when you’re constructing a product can lead to some catastrophic consequences.

Another reason why legal battles occur between engineers and their client is poor time management. Even if it’s not necessarily the engineer’s fault and if there were unexpected delays or a subcontractor misled the engineer, the client still has the right to sue, which they will do in most cases.

If you’re an engineer who works as a consultant, you can also find yourself in legal trouble if advice or information you gave to a client resulted in damages.

These are just some of the examples of why professional liability coverage is essential.

Types of coverage

There are two policies for engineering companies:

  • Public liability insurance. This coverage is used when engineers are held liable for property damage or the injury of a third party. When a victim decides to sue a company, public liability insurance will cover the lawsuit. This type of policy is also known as Errors and Omissions insurance
  • Professional indemnity insurance. If an engineer causes damage with the professional advice they give to a client and get sued; this coverage will help pay for legal fees.

Why you should get insurance for your engineering business

Most insurance agents will tell you that you need to have insurance, regardless of whether you work in a big company with thousands of employees or are a one-person business. If you really want to protect your company, you need to have both public liability insurance and professional indemnity insurance.

Below are listed the instances in which you will benefit from having an insurance policy.

Lawsuit defense

Gavel on desk

Defending your case in the court of law is not only a long process; it’s also an extremely costly one. As we already said, mistakes are a part of human nature, and while most mistakes can be caught before they escalate into a legal battle, that’s not always the case.

If even one small error slips through the cracks, you’ll be happy that you have the Errors and Omissions policy to help you cover the costs related to a lawsuit.

Another benefit of insurance is that it also helps engineers defend against nuisance lawsuits. Even in the cases where the wrongdoing can’t be related back to you and is only perceived, you will still have to pay a sizable fee for someone to investigate and defend your case.

In any and all lawsuits, you can count on your insurance carrier to pay for your expenses that come with fighting a legal battle. This includes attorney fees, costs to file motions with the court, and the cost of hiring an investigator, just to name a few.

Contract requirement

Person signing contract

Insurance is there to do much more than just protect you from financial laws. If you purchase this policy, you will also be able to win more contracts.

This is because every business owner is looking to protect their investment. When someone signs a contract with you, they trust you that your company will complete the work with no issues and with no loss for them. But unfortunately, this isn’t always the case.

Just like insurance is there to protect your company from losing a lot of money or even going bankrupt just to pay for a lawsuit, it’s also there to protect your clients and their investment. If you’re sued and don’t have insurance, you won’t be able to compensate clients for the damages you caused.

If you want to give your clients peace of mind and assure them that they will get reimbursed for any damages if they occur, professional indemnity insurance is a necessity. Your professional indemnity insurance cover applies in the following scenarios:

  • Professional negligence that occurs during the course of work with a client
  • The loss of goods or money a client suffers due to a mistake you made
  • Loss of documents and data
  • Libel and defamation
  • Unintentional breach of copyright or confidentiality

It’s also important to mention that more and more clients have professional indemnity insurance as a contract requirement. If you don’t have it, you won’t be able to win any big contracts with reputable clients, nor will you be able to position yourself as a serious business.

Protecting your machinery and electrical equipment


As an engineer, you probably use a lot of different machinery and electrical equipment in your line of work. If any of it gets damaged, it’s going to take a lot of money to replace it. Luckily, you can insure your equipment, and there are two ways to do so.

The first is to choose a sum that will reflect the value of the equipment, and the second is to replace the machinery on an “as new” basis. However, this second option is only available in certain cases and doesn’t apply if the machine is used and kept outside or is older than a certain age.

You will also be able to insure the equipment that’s away from your business premises, and there won’t be a need to itemize every single piece of machinery and equipment you have.

Not only will you be insured in the case of equipment breakdown, but also theft or loss, as well as any damage that’s accidental, unforeseen, or sudden.

And just like you need to insure all of the contents within your building, you also need to insure the building itself, which is something your insurance policy will also cover.

Final thoughts

No matter how professional and careful you are, you can’t expect everything to always go perfect. Lawsuits are very common in the engineering profession, and unless you want to liquidate your firm just to pay off the costs related to a lawsuit, you need to get insurance.

And as you could clearly see, insurance is there to protect you in many different ways and has multiple benefits, so there is absolutely no downside to it.

Comments are closed.