The most important type of insurance that an Engineer needs in order to protect themselves, is insurance protection for financial loss from providing professional engineering services to others.
Professional Indemnity provides protection for financial loss suffered by a Third Party arising from the advice provided by the engineer.
The other main types of insurances to consider are Liability and Cyber. Liability provides coverage for damage or injury to Third Parties due to incidents such as Slip and Fall. Cyber coverage is also becoming a near mandatory coverage due to the potential risks involved in handling sensitive own and client data. For larger firms, due to mandatory government requirements, having this cover is something that should be strongly considered.
An Engineer requires insurance for various reasons. Ultimately, the primary reason is to ensure that if something unexpected happens to a client and a loss occurs as a result, there is insurance protection to step in and cover the loss suffered.
It is typical to find in contract there is a stated requirement of certain level of insurance. This will be found within the insurance clause of the contract. We are happy to review both the insurance and indemnity clauses of a contract for a client, as the Indemnity clause will state the amount, and who is taking the risk.
Due the nature of work involved with Engineering construction, we strongly recommend that prior to signing contracts you fully review both your insured and uninsured exposures, which we can assist on through the provision of general advice, and written legal advice to our clients when required.
A claim was made against the Insured for work they did to a property involving cantilevered roof and supports. It appeared that some of the rafters had deformed and welds had cracked. The claimant sought damages of $200,000 as a result of having to rectify the property.
The insurer appointed lawyers to defend the claim as well as an expert engineer to act as a loss adjuster. The expert engineer was able to determine the reasonable cost of the loss, and the lawyers were able to secure a fair settlement. Payment: $185,000.
The Insured certified the design of an apartment building in which a significant fire subsequently occurred. The Insured was subject to investigations by the Building Consent Authorities and the Building Practitioners Board.
The Insured was covered for legal costs incurred in relation to responding to the investigation. Payment: $100,000.
These two claim examples have been provided by Dual Insurance.
A requirement for all engineers is to have a Professional Indemnity policy. This is essential to protect against claims alleging a breach of professional duty including both damages payable and legal costs that are inferred in defending the claim.
As Engineers are experts in their chosen field whose advice is relied upon by clients, a duty is created between Engineer and client. If a breach, error or omission occurs the client can then claim damages, or their financial loss suffered, against the engineer.
Engineers work in public spaces which involves them dealing with members of the public, contractors and employees of other businesses. Due to this, Public Liability Insurance is important as it will protects the Engineer against liability from injury or damage caused from their business activities.
Public Liability Insurance does not cover injury that directly results from advice for a fee, and hence, Professional Indemnity insurance provides this cover.
Due the the high level of computer technology involved in construction design work exposure is possible through. Data can accidentally by employees or maliciously by outside intruders be lost, corrupted or stolen.
Cyber insurance can provide data protection for the Engineer.
In summary, insurance is important for Engineers.
We recommend that a full review of your risks and exposures in business be undertaken on a regular basis to ensure your risk is reduced.
A simple and easy way of doing this, is by having insurance.