Professional Liability Insurance

I just went down this path. I knew an independent insurance agent from church so I called him up. My understanding is that there is a minimum coverage based on gross billings. The spread is something like 0 to $300k. I'm general civil/environmental which may be a little different than structural but my coverage will cost about $4500 per year.

Do a thread search on professional liability insurance. It has been discussed here many times.

I use the IEEE. The professional societies often have arraignment with insurance companies.
JIM

Make sure you're not confused:

Liability Insurance for being clumsy and knocking over a ladder which crashes into a machine and temporarily halts production and requires repair money is cheap. I paid $300/yr for $1M coverage.

Then there is Errors & Ommissions Insurance (E&O) which covers stupid design screwups which makes buildings collapse, thus causing a sharp increase in the happy/sad lawyer ratio. You pay through the nose for that when you first start out. It's the industry's method of sifting through the people who are serious about starting a consulting engineering firm.

TygerDawg
Blue Technik LLC
Advanced Robotics & Automation Engineering

I have $1M E&O for about $3500/yr and $1M liability for $500. My clients have insisted I carry it, and I am glad to have it.


Don Phillips

You should be able to do better than $1M liability for $500.

State Farm has it for about $200-$300.

$1M E&O may or may not be enough, depending on what you do. If you are in strutural, and structure collapses, $1M doesn't cover you for much.

"Do not worry about your problems with mathematics, I assure you mine are far greater."
Albert Einstein
Have you read FAQ731-376 to make the best use of Eng-Tips Forums?

I did a lot of searching for Professional Liability insurance as a one-engineer company. The best I could come up with for $1M coverage was about $2000 per year, and I had to enter into a 3-year contract, and pay all $6000 upfront. I found the company from a reference on one of the professional society webpages (maybe ASHRAE).

My business is strictly HVAC; I would imagine that the rate for structural might be more.

---KenRad

The original post asked about "professional liability insurance" which is also referred to as Errors & Omissions Insurance. I assume that the original poster was not asking about general liability insurance. If I am correct, then the original poster may be getting mislead or consufed by the above stated premiums for general liability.

The insurance premium is also dependent on the type of work the engineer is doing. Therefore, it may be inappropriate to discuss insurance premiums for engineering services other than what the original poster intends to provide and which I assume is structural work. Insurance premiums also depend on the amount of work or billings.

The original poster needs to talk to an insurer or broker that specializes in professional liability insurance and have past and future billing information available to obtain a quote.

The fee for the insurance will go up with the annual billings.

After 5 years in business, my combined insurance (general liability is "free" in that for that line item the policy says "Included") is down to $18k. First year it was over $20k. As my company billings go up, the premium per $1000 gross billings goes down a tiny touch faster.

I'm not sure what folks are getting for $4500, but I've tried to get insurance through ASME, SPE, and AARP (really) and they were all in the same ballpark as I'm paying. The consumer-oriented insurers (i.e., State Farm, Farmers, Allstate, GEICO, etc.) won't even talk to me (they say it's because of my industry).

David

I have been a Nationwide policyholder for over 20 years - cards, house, and umbrella - and did not get a serious offer last year when I was first looking into E&O. They were subbing it to CNA but should have given me a quotation. The larger, traditional insurance companies just do not seem know enough about professional liability to seriously get into it.

Don Phillips

The rates for generaly liability depend on where you live. Typically, my clients request both a general liability policy and an commercial automobile liability policy (if you hit something driving on the site), worker's comp (even for a one person firm (there are zero payroll policies that can cover this)) plus E&O. Of the three insurances, they seem to care the least about the E&O but there is no way I would be without it.

Structural work definitely drives up the E&O costs compared to general civil type work, or even most mechanical work. Some companies will not quote coverage structural type work. I found that the rates through ASME were similar to what I could find on the street but shop each year.


To answer the original question, coverage through ASME or ASCE seems to be a nice route for the start-up.