How Professional Liability Insurance Protects Engineers

How Professional Liability Insurance Protects Engineers

October 12, 2023 / 5 mins read

You face specific risks as an engineer. Whether you are an independent contractor, part of a small firm, or you work for a large Toronto engineering company, professional liability insurance protects you from claims of professional negligence.

An error in the services you provide as an engineer could result in a costly lawsuit against you or your engineering firm, affecting your professional reputation. Professional liability insurance protects you from errors, perceived errors, unexpected costs, and delays that can lead to lawsuits from your clients.

Are you working as an engineer in downtown Toronto or is your Toronto business office located in one of the city’s many neighbourhoods?

Do you need Toronto business insurance as an independent engineer or as part of an engineering firm in the boroughs of Scarborough, Etobicoke, North York, York, and East York? Or are you in Mississauga, Brampton, Vaughan, Markham, Newmarket, Orangeville, or Milton?

Wherever you are working as an engineer in Toronto, the Greater Toronto Area (GTA) or anywhere in Ontario, your Western business insurance expert will give you top-notch insurance at the right value for you.

Western will get you professional liability insurance as an engineer in addition to Toronto business insurance that will protect your livelihood as an engineer. Engineers who need professional liability coverage include:

  • Mechanical engineers
  • Electrical engineers
  • Management engineers
  • Civil engineers
  • Geotechnical engineers
  • Chemical engineers
  • Aerospace engineers
  • Computer engineers

Did you know that you will also hear professional liability insurance called errors and omissions insurance?

What is professional liability insurance for engineers?

Professional liability insurance provides coverage for claims of negligence, misconduct, or failure to deliver a service as expected. This type of insurance can help cover your legal fees and court-awarded settlements up to your policy limit.

Note: Professional liability insurance does not cover deliberate misrepresentation or criminal acts.

How professional liability insurance protects engineers

Professional liability insurance can help protect you from these 3 common claims:

1. Due to miscalculations on your part about the cost of materials for an office building, the project is seriously over budget and is delayed by 3 months. Your client sues you for professional negligence. Your professional liability insurance will help cover the legal fees and a court settlement.

2. You approved a minor design change for a walkway with handrails. During a heavy windstorm, the handrails became loose and the walkway needed to be closed for repairs. The city successfully sues you for professional negligence and the damaged walkway. Your Professional liability insurance may help cover the legal fees and the cost to repair/replace the handrails.

3. Piping in a new residential building caused extensive water damage. As the engineer overseeing the building’s piping, you are sued for negligence. Professional liability insurance can help cover your legal costs and any court-awarded settlement.

What determines how much professional liability will cost?

  • Past claims
  • Types of projects
  • Years of experience
  • Annual revenue
  • Location
  • Equipment and tools owned

Here’s a business insurance checklist for engineers:

  • Do you have the best Toronto business insurance rate that suits your work?
  • Do you have the right amount for your deductible and regularly review it to make sure it’s the right amount for you?
  • Are you or your employees using personal vehicles for work?

What else is in an engineer’s insurance package?

Commercial general liability (CGL) insurance

Without commercial general liability insurance (CGL), you would be responsible for paying any liability costs out of your own pocket if a client were to get injured or her property damaged at your engineering office. CGL insurance is also known as “slip-and-fall” insurance.

This type of coverage can also help protect you against allegations of false advertising, libel, or slander as an engineer.

It’s recommended that you have at least $1 million in CGL coverage.

Cyber liability insurance

If you are a self-employed engineer or you own an engineering firm in Toronto that stores your customers’ names, addresses and credit card information, you are vulnerable to a cyberattack.

Without cyber insurance, you will have to pay out of your pocket for the cost of restoring your system. You may also be liable for damages to third parties whose information has been stolen and you may have to pay for notification expenses to inform your clients affected by a breach.

Commercial property insurance

If you are a self-employed engineer and have your own office or if you are an engineering firm owner, this type of insurance helps with the cost of repairing or replacing your commercial property in the event of an accident or natural disaster.

Typically, commercial property insurance covers theft, vandalism, and fire.

You can also add earthquake insurance, sewer backup or flood coverage extensions to protect your Toronto business.

Commercial auto insurance

If you use your car to meet clients or go to job sites, you need commercial auto coverage as part of your insurance package. Personal car policies will not cover you or any employees using your car for engineering work.

Tools and equipment insurance

It replaces, or repairs damaged, stolen, or lost equipment and tools, accessories, or other property that you use as an engineer.

Anything valued at less than $1,500 is considered a tool and anything above that limit is considered equipment.

This type of insurance can also be called equipment floater insurance.

What do I do if I need to make an insurance claim?

  • Contact your broker immediately after any business-related mishap. Waiting to file a claim can confuse insurers about the severity of the damages to your business.
  • Know your policy so that when you contact your broker you are familiar with what will be covered or not.
  • If there’s any damage, document it. Take photos right away and write down what happened.
  • Do not throw away damaged goods after taking photos. Keep the physical evidence so that your adjustor can see it.
  • Do not invite lawsuits. Don’t say anything that could be used against you, especially if you aren’t sure what happened.
  • Be honest about what your damaged property is worth. Damaged commercial property is generally valued according to its actual cash value or replacement value.

Western Insurance has licensed BUSINESS INSURANCE EXPERTS to get you the right insurance package as an engineer or owner of an engineering firm. Our experts are available now to help you navigate the business insurance journey to protect you as an engineer.

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