Engineers and Risk
As an engineer, your business faces unique risks. While on-the-job injuries and disasters might not be as common, but engineers perform complex work. One mistake or miscalculation could have costly - or even deadly - consequences.
If you own an engineering firm, you’re at risk for being sued for mistakes you or your employees may make, including mistaken advice given to clients. You also face risks as a business owner in general, for everything from having employees to maintaining an office. The legal costs of a suit can quickly add up and bankrupt a small firm, which is why it’s important to have comprehensive insurance coverage. Here are some of the policies engineers should consider.
Business Owner’s Policy (BOP)
A Business Owner’s Policy, or BOP, is an incredibly convenient way to gain broad coverage as it combines elements of a few of the most common types of insurance for small and mid-size businesses - Property and General Liability. It may also include Business Interruption Insurance, which comes in handy if your engineering firm is ever forced to close due to a disaster out of your control, like a fire.
As an engineer, you may find that clients require you to have General Liability coverage before they’ll agree to sign a contract, and an affordable and convenient BOP will satisfy your client’s requirements in most cases.
If you have a physical office space where non-employees will visit, a BOP is important because it protects you from claims of third party injury. For example, if you invite a potential new client to your office space to review a proposal and they slip and fall, you could be held liable for any injuries they sustain.
Your BOP will also protect assets that could be damaged or stolen, such as office equipment and computers, in addition to your office itself.
Workers Compensation
Engineers don’t face a high chance of on-the-job injuries, but accidents do happen. If you have any employees, it’s important to have Workers Compensation insurance. In fact, Workers Compensation is mandatory in most U.S. states, though whether it’s required depends on the number of employees your firm has.
This type of insurance protects both you and your employees if someone gets injured on the job. It covers both medical costs and lost wages while an employee is out of work. It’s appealing to employers as well, because it employees who accept Workers Compensation are less likely to sue for lost wages, protecting businesses from litigation.
Most of your engineers are probably pretty smart, but accidents do happen. Engineers also may visit client sites frequently, meaning they’re facing all the risks associated with a construction site.
Errors and Omissions (E&O)
As an engineer, you provide valuable expertise to clients. But if you or an employee makes a mistake or provides the wrong advice, or your client believes they received erroneous advice, the client might sue you. Errors and Omissions coverage will help to protect your business in these situations.
For example, your firm may provide specifications for a tunnel connecting two roadways. After the tunnel is complete, the city discovers a leak that’s going to be expensive to repair. They could sue you, alleging that you made a mistake in advising them.
Or, you could help a client construct a new residential tower. You believe your plans took all local laws into account, but after construction begins, your client discovers they aren’t complying with the law. They could sue you for the cost of any rework on the project.
Even if you’re not at fault, the cost of defending yourself from a claim could bankrupt you. These types of situations make Errors & Omissions, or E&O, insurance essential for engineering firms.
Hired & Non-Owned Auto
At engineering firms employees may drive for business purposes in non-company owned vehicles to make site visits and meet with clients. In these cases, you may want to make sure you’re covered with Hired and Non-Owned Auto coverage. If your employee is in an accident while driving for job-related reasons, your business could be held liable..
Many business owners mistakenly believe they’re fully covered with Commercial Auto insurance. However, this may not be the case. Commercial Auto insurance is primarily for company-owned vehicles. If employees use personal vehicles for work, you may need to add additional coverage.
Umbrella
You already have a General Liability policy or Business Owner’s Policy, but in some cases, you’ll need extra coverage. You might work on a larger project that contractually requires higher coverage limits, or you might decide you want to up it for a certain a project yourself.
A large project may require you to use expensive equipment, or collaborate with many outside contractors - both scenarios that expose you to additional risks. Here, you’ll want to consider an Umbrella insurance policy. Umbrella policies can be surprisingly affordable, and are generally sold in $1 million increments. Adding an Umbrella policy is an easy, cost-effective way to protect your business in a variety of situations.