Why do engineering consultants need insurance?
Contract terms may require you to hold professional indemnity or public liability insurance to take the job.
Accusations of errors, omissions, or negligence
Engineering consultants provide expertise in a specific field. Clients will often have some elementary grasp of the discipline, but overall, they rely on you for their desired outcome. Not meeting these expectations can lead to disappointment, disputes and compensation claims.
Unpaid invoices and contract disputes
Engineering consultants are required to design a solution to their clients' challenges. No matter how well defined the responsibilities and obligations in the contract, a client still may claim that you failed to deliver. Unfortunately, withheld payments often follow an alleged contract breach.
Causing property damage or injury
Engineering consultants often visit sites filled with people and valuable property. Face-to-face work sometimes leads to injury or property damage. If you’re involved, you could be held liable.
Claims of causing financial loss
If your client feels that your work has hindered their business or project, they may attempt to recover their financial losses by bringing legal action against you.
Professional indemnity insurance for engineering consultants
Working as an engineering consultant involves the risk of legal claims of wrongdoing. Professional indemnity insurance protects engineering consultants from accusations of professional mistakes, negligence, poor advice and other claims against you or your business.
Help from professional indemnity insurance can be sought immediately after an allegation is made against you by your client. A legal team will review the claim and advise on the next steps, and if the situation escalates to legal action and compensation, your insurance will be there for those costs.
What does engineering consultant professional indemnity insurance cover?
Professional indemnity insurance protects engineering consultants from claims or accusations of wrongdoing from their professional advice or work product.
- Failing your duty of care
- Making a mistake
- Acting negligently
- Giving the wrong advice or recommendation
- a lawsuit accusing you of an error,
- losing sensitive data, sharing confidential information with an authorised party,
- making the wrong recommendation or causing property damage.
Is professional indemnity insurance mandatory for consulting engineers?
The law does not require consulting engineers to have professional indemnity insurance. However, your contract with your client or industry regulatory body may insist on some level of this cover.
What professional indemnity limit do engineering consultants need?
You should consider several factors when deciding on a professional indemnity limit.
Factors to keep in mind:
- Does your contract specify professional indemnity up to a specific limit?
- Does your contract state you agree to be liable for damages up to a certain amount (e.g. £1,000,000)?
- What is the total value of your client contracts over the last few years?
- What costs might you be exposed to if your work goes wrong?
- How will your work be used, and who is the end consumer?
- What might it cost your client if you can’t deliver on time?
- Do you play a senior role in the delivery of work?
Generally, the more complex your engineering consulting work, the higher the limit you will need.
Switching your professional indemnity insurance
Typically, in the UK, if you cancel a professional indemnity policy, you can no longer claim against it.
Therefore, if you switch your engineering consultant insurance provider, be sure your new policy covers your past work; this is called “retroactive cover”.
Should I keep professional indemnity insurance if I close or pause my engineering consultancy business?
It’s wise to keep your professional indemnity if you close your engineering consultancy. Claims against professional misconduct can surface months or years after you delivered the work.
If a past client sues you for damages and you have cancelled your professional indemnity, you will not be covered.
How long you keep your cover in place is up to you; consider the type of work you did and the likelihood that a client might bring a claim against you.
Public liability insurance for engineering consultants
Public liability insurance shields engineering consultants from claims of injuries or property damage.
If you have any kind of face-to-face contact with your clients and the public during your business, then there is a risk of third-party injury or property damage. Something as small as spilling your flat white over a client’s laptop can set you back a few thousand pounds.
The trigger for response under public liability insurance is either an injury, death or property damage caused accidentally by you during your business activities.
The word accidental is essential. We are talking about accidental slips and falls, a knocked-over piece of expensive equipment, or accidentally causing an injury by distracting someone from their work.
For example, a construction site project manager demanding a worker’s attention just at the wrong time as they’re using a dangerous tool can lead to the worker’s injury. The blame would be apportioned to the project manager, who’d be expected to pay for the medical bills and possibly compensation.
What does engineering consultant public liability insurance cover?
Public liability insurance is valuable when faced with injury claims and compensation demands.
- accidental injury or death
- accidental property damage
- A client visits your premises and is injured in a slip or fall
- You visit a client site, trip over a lead or pipe and inadvertently set into motion a series of events leading to property damage
Other insurance engineering consultants buy
The insurance needs of an engineering consultant vary depending on your circumstances. Can you handle a legal dispute financially? Is expensive computer equipment integral to your income? What would happen to your business if you became ill and couldn't cover operating costs?
Commercial legal expenses insurance
Most commercial legal expenses insurance will protect engineering consultants against various tax and legal issues you may encounter due to your profession, which are not covered by professional indemnity or public liability.
At Suited, we combined £100,000 of commercial legal expenses insurance with helplines and other tools to better assist engineering consultants in dealing with these issues. We call this Business Legal Protect, and it’s part of your subscription.
Business Legal Protect provides qualified advice and assistance with:
- Legal and tax matters concerning your business
- Criminal prosecution
- Compliance & regulation issues
- Unpaid invoices (over £200)
- HMRC investigates your tax affairs
- You are facing an investigation from a professional body
- You need legal help chasing a significant unpaid invoice
- You’re being taken to court for breach of contract
Electronic business equipment insurance
Engineering consultants rely on electronic equipment to deliver their services more than ever. If your business depends on electronic equipment, consider electronic business equipment insurance.
Income protection insurance
Income protection insurance covers your earnings if you become so ill you cannot continue to work.
Shopping for engineering consultant insurance
Whether or not you decide to use Suited engineering consultant insurance to protect your business, it’s worth keeping the following in mind:
Cheap engineering consultant insurance
Don't just look at the price when choosing your engineering consultant insurance. Ensure your provider is reliable. Suited offers fast responses and various communication options for your peace of mind.
The reputation of the insurer is important
Insurance needs to be there when you need it most. The payout reputation of an insurer is essential. Suited uses financially sound insurers with an A+ rating.
Many providers charge fees to amend or cancel
Low initial prices often hide additional charges to pay monthly, amend or cancel your policy. At Suited, we charge no extra fees, and you can cancel anytime with no more to pay.
Some policy wordings are restrictive or have a high excess
Some providers will offer attractive prices, but it is at the expense of cover given. Suited professional indemnity and public liability have £0 excess.