insurance when PE license not required (but exists?)

[HgTX]

Related to an earlier question:

I hold a professional engineering license.
I don't stamp anything.
A license is not required for my position, though some of what I do I could argue is engineering (and may even do so for getting an additional license).

Do I need E&O or any other kind of engineer-related insurance? (My company would pay for it, but I'm the only PE here so it's up to me to figure out what's needed.)

Hg

Eng-Tips policies: faq731-376

 

[Ron]

HgTX...even though your position might not require "engineering", you are nevertheless licensed as one and will usually be held to a higher standard of care than a non-engineer. That's just the way it is.

Having said that, insurance also makes you a target. If you think you can logically make the argument that there is no engineering or design involved (not even peripherally), then you could probably take the chance...otherwise, the insurance is not that expensive, particularly if you can parse out the financial aspects of true engineering (yes I know you said there is none...but you'll have to show some engineering activity as the basis for the insurance), otherwise you'll pay premiums on gross fees of the company.

 

[rbulsara]

Yes. If you are working for someone else, that company should have the insurance and your name included in it. Do not take personal policy to protect your employer.


Rafiq Bulsara

http://www.srengineersct.com

 

[HgTX]

Company agreed to pay. I just need to figure out what (if anything) I need to ask for. At my previous employer there were lots of engineers and we were all covered in some appropriate fashion that I didn't have to think about, so I never learned.

What I do now that constitutes engineering is making (as part of a team that I don't necessarily lead) proposals to EORs for them to accept or reject. But the final decisions are in the EORs' hands.

Is there a good resource for finding out about all this? I have more questions than I should be aiming at this group--like does it matter what state the insurance provider is in vs. what state I am licensed in vs. what state I live in vs. where my company has locations vs. where the work will be erected, etc., etc...Is this the kind of thing the state licensing board would know or is insurance beyond their typical purview?

I'm about to apply for licensure by comity at my new location, but I might hold off till I figure out the insurance angle.

Hg

Eng-Tips policies: faq731-376

 

[rbulsara]

Good old answer: Ask a lawyer who deals with professional engineering related cases.

It won't hurt to locate an Professional Liability insurance agent in your area and talk to them. Some are more helpful than others, before you take business to them.

Rafiq Bulsara

http://www.srengineersct.com

 

[Ron]

HgTX...just because the EOR makes the final decision doesn't absolve you from liability. It is called specific reliance. He/She relies on your proposal and makes decisions based on that reliance...>>>liability for you.

Your problem is going to be how to figure out how much of the fee is attributable to "engineering" and how much has nothing to do with it....so you don't pay astonomical E&O premiums.

 

[HgTX]

I need a "for dummies" reference. "Fee"? We're a producer.

Hg

Eng-Tips policies: faq731-376

 

[Ron]

HgTX...E&O premiums are usually based on gross revenue. So for an engineering firm, they should be careful about subcontracting work under their "umbrella" as this counts against them in the E&O premium computation.

Since you're a "producer", you might be able to negotiate an E&O fee based on a percentage of revenue or some other discounting method, so that you don't have to pay based on a production/supply revenue vs. a service revenue.

Go to XL Insurance's website...their info is pretty good.

 

[HgTX]

XL referred me to someone else, who did some research and said that yeah, I'm held to a higher standard and it would be a good idea to have professional liability insurance but (a) I can't just get it myself because that would only cover what I might do for my own business
(b) if my company gets it, it is liable to be $$$$$ because as someone said above it goes by firm's gross. They had another client in a similar situation, working for a producer, and the policy still came to $14K.

What does such coverage cost under normal circumstances?

Here's another question--this is insurance that the company takes out. What happens (a) to the company (b) to me if "something happens" and there was no such insurance?

Hg

Eng-Tips policies: faq731-376

 

[rbulsara]

This is akin to asking, "I want to get in trouble, do you think I will be in trouble?"

(a) is only for your own business as you have been advised already. So no one will even issue you a policy without your own legal business. And if you set up your company, it's insurance coverage will not apply to any lawsuits arising out of work you do for another firm.

(b) You will be on your own to defend any lawsuits and pay for any expenses related to the litigation. Your company will be on their own to defend themselves. They have no incentive to spend money to protect you. If they had, they would take out the policy on their own now and include you as an insured.



Rafiq Bulsara

http://www.srengineersct.com

 

[HgTX]

I'm not saying they won't. They just don't know anything about this stuff, so I have to explain it to them.

My guess is they were not anticipating that level of expense.

My guess is also that if someone starts slinging lawsuits, the fact that I am not a PE in the state in which the work will be erected (recall that I am NOT sealing work, just making suggestions to EORs) will not get me off the "extra standard of care" hook and that rather being a PE anywhere gives me this liability. Reasonable guess? Because otherwise, I can just leave myself licensed in my former state, leave "PE" off my current business cards (it's not there now but it would have been nice to put it on there), etc.

Hg

Eng-Tips policies: faq731-376

 

[anchorengineer]

Call an insurance broker. Mine has been around for a while and I call him all the time. In NY there are only a few major insurance companies for PE's. I worked for a manufacturer before and I am a PE. I had to watch what I said every day because I could be held liable for even suggestions. If something goes wrong, the lawsuits will go for the deep pockets. They'll go for the company first. If having the PE is not critical for your position don't use it. Some states (like TX) are extremely strict even calling yourself an engineer. Everything you say should just be the facts and let the customer make the final decision. Just tell them that your not insured to be a consultant. At least that's how I was coached. I'm on my own now and feel very relieved to say what I want. I have my own E&O which is based on billings. Good Luck!

Clarke Engineering Services, PC
Construction Consulting & Anchor Testing

http://www.anchorengineer.com

 

[glass99]

If a project goes to a lawsuit, everyone gets named irrespective of whether they stamp anything. At my old firm, we were named in a lawsuit for a building next door to the one we designed (but on the same development).

E+O premiums for a civil engineer should be in the range of 3% of your design fee.

 

[HgTX]

No design. Occasional repair suggestions.
No design fee.

Hg

Eng-Tips policies: faq731-376

 

[JAE]

HgTX,
Many E&O firms will look very closely at the type of work you perform for clients before determining their risk and, ipso facto - their premium to you.

If you can show the exact nature of your services, that they don't necessarily fall under "engineering work" as defined in the state in which you reside, it may be that the premiums aren't that much as their risk is lower.

It may be that you don't technically fall under the definition of engineering with respect to your practice and thus may not have much liability in true legal terms.

I agree with the others above that you, being an engineer, are held to a higher standard with a license. But that standard has to do with pure ethics (which aren't a legal risk...i.e. don't drive drunk, etc.) and engineering practice (design it as other competent engineers would).

In practical terms, you should ensure (with your lawyer) that if there is a lawsuit, your firm will hold you harmless as you work under their corporate banner. I don't know the legal term for this (Ron?) but generally you can't be held liable, personally, for a corporate act.

You can still be sued - but under the corporate umbrella you would ultimately be safe, but perhaps a bit poorer from legal fees to get it thrown out.