Architects and engineers don’t necessarily do the same type of job, but they are frequently tied together by insurance companies looking to provide professional liability coverage. Architects and engineers use the principles of math, science, and technology to create structures; at least, in general terms.
According to Teach Engineering, the architect focuses more on how a building looks, whereas the engineer is more concerned with safety and meeting codes. A wide range of jobs fall under these two categories. Some of them are:
- Electrical engineers
- Structural engineers
- Design architects
- Production architects
- Mechanical engineers
- Land surveyors
- Environmental consultants
Any of them can be sued for miscalculations, design flaws, or oversights. That’s where professional liability insurance (also called errors and omissions insurance or malpractice insurance – see how they are different here) comes in.
- What is Professional Liability Insurance?
- Why do Architects and Engineers Need Professional Liability Insurance?
- How Much does Professional Liability Insurance Cost for Architects and Engineers?
- What Affects How Much Architects and Engineers Pay for Professional Liability Insurance?
- Top 5 Providers of Professional Liability Insurance for Architects and Engineers
What is Professional Liability Insurance?
If a client is unhappy with some part of your work, professional liability insurance will protect you. It will cover:
- Legal fees
- Court costs
Anything else, such as bodily harm or property damage, is covered by a different insurance policy, usually general liability insurance.
Errors and omissions insurance (or E&O and also called professional liability insurance: the two terms are interchangeable) provides protection against claims of negligence or mistakes that causes a client to suffer financial loss.
Why do Architects and Engineers Need Professional Liability Insurance?
Architects who design big money properties will undoubtedly be sued if expectations are not met. Princeton University filed a $10.7 million dollar lawsuit against lead designers for additional costs due to delays. (Archinect) And that’s just one lawsuit.
Architects and engineers often serve corporate clients, who may be more inclined to sue to recoup their financial investment if things go wrong. And if you’ve worked as an architect or an engineer, you know that a lot can go wrong. Contractors can misinterpret renderings, resulting in delays. Someone orders incorrect materials and they can’t be returned. A structural engineer makes a bad recommendation.
If you’re an independent contractor, just one lawsuit could bankrupt you. And you don’t have to be guilty of anything to be sued. Also, many of your clients may want to see proof that you have insurance.
How Much does Professional Liability Insurance Cost for Architects and Engineers?
Insureon, an online commercial insurance broker, estimates that the cost of professional liability insurance for engineers is about $155 a month or $1,825 annually.
Insureon also estimates that the median annual cost of professional liability insurance for an architect is about $145 a month, or $1,730 a year.
Many insurance policies lump architects and engineers together when providing errors and omissions insurance.
What Affects How Much Architects and Engineers Pay for Professional Liability Insurance?
Why is there a discrepancy between architect and engineer insurance? Insurance companies have actuaries, the people who analyze all of the claims brought against a profession and analyze potential risks. Some engineering jobs carry higher risks because the potential lawsuits are bigger in the event a building collapses due to an engineering error.
Below are the factors that affect how much architects and engineers pay for their professional liability insurance:
- Amount of your deductible: Deductibles start at $1,000 and go up from there
- Amount of your policy limit: The most common limit is $1,000,000 limit with a $1,000,000 aggregate, but up to $5 million is possible
- Your field: There are many different types of engineers, and some carry more risk than others.
- Your claims history: The more claims you had in the past, the more your premiums are.
- The types of materials you work with: Working with asbestos, lead, or other polluting materials will increase your premiums.
- The types of engineers you are: There are forty different kinds of engineering degrees (typesofengineers.org) with engineers building everything from aerospace products to roller coasters. What you build will also affect rates.
- The types of things that you design: Architects can design anything from office buildings to stadiums. What type of building you design will affect rates to some degree, as will the size of the firm you work for, or the amount of revenue you earn if you work as a contractor.
Top 5 Providers of Professional Liability Insurance for Architects and Engineers
- CNA: Best for Those that Prefer Working with an Agent
- Victor: Best for Small Architecture and Engineering Firms
- A&E: Best for Architects and Engineers in Select States
- Chubb: Best for Comprehensive Coverage
- Hiscox: Best for Online Quotes
CNA: Best for Those that Prefer Working with an Agent
CNA has over fifty years of experience serving architects, engineers, and design professionals. They are recommended by the National Society of Professional Engineers (NSPE). They are also the nation’s leading provider of professional liability insurance, so they have a great deal of experience.
You can pay a bill and report a claim online. However, CNA prefers that you contact an agent to get a quote for Professional Liability Insurance, although you can get a quote for general liability insurance on the website.
Victor: Best for Small Architecture and Engineering Firms
Victor used to be called Victor O.Schinnerer and company. They can insure any size architect and/or engineering firm. They have over 60 years insuring just these professions.
They have a $0 deductible option if your firm earns less than $5 million year. Other features include coverage for pollution and asbestos.
To get a quote from Victor, you fill out your name and what state you’re in and a broker will get back to you with a quote.
A&E: Best for Architects and Engineers in Select States
A&E are an insurance broker specifically for engineers and architects. As brokers, they have no loyalty to any one insurance company but will look and try to find you the best deal.
They provide quotes for 32 states. Go to their website at A&E to find out if your state is covered. Then fill out an application and an agent will contact you.
Chubb: Best for Comprehensive Coverage
Chubb offers professional liability insurance for a variety of engineering and design professions. You can get up to a $10 million dollar limit on your policy. They offer pre claims legal assistance and they don’t have a lead or asbestos exclusion. They tend to be on the pricier side, but if you have a lucrative business you need to protect, they may be worth it.
To get a quote from Chubb, they ask you to contact them so they can provide you with a quote.
Hiscox: Best for Online Quotes
Hiscox offers quick, online quoting for both architects and engineers. You can purchase your policy online and get immediate coverage, which is handy in case a client requests it.
The quote we got was for an architect in Indiana.
Architects and engineers both work in the design field, although they have different roles. The architect is concerned with aesthetics, whereas the engineer is most concerned with safety and meeting enforced standards. Either one has the potential to be sued by an unhappy client, even if they didn’t do anything wrong. Professional liability insurance can help cover any errors or mistakes you made, or a client thinks you made.