One of the first things to consider when managing your business’ risk is having the right types of business insurance in place. The reality is all businesses face an element of risk regardless of their size or the industry or profession they are in.
As an engineering business, you provide specialised professional services and advice to clients, making Professional Indemnity insurance an essential safeguard against the risk to your business. There are a variety of scenarios where an engineer may be faced with legal liability claims – a worry you can live without.
Every industry and profession has its own unique set of risks, and engineering is no exception. Some of the common claims involving engineers include allegations of breach of duty, making false or misleading representations or breaching the Engineers’ Code of Ethical Conduct. Here are a few things which you need to consider when arranging your insurance policy.
What is professional Indemnity?
Professional Indemnity (PI) insurance* is an essential form of protection for businesses designed to respond to claims against your business for losses as a result of actual or alleged negligent acts or omissions in the provision of your service or advice. PI Insurance will also assist with the legal costs associated with responding to or managing claims which are covered by the policy.
It’s essential to take the time to understand the details of your Professional Indemnity insurance policy, making sure your engineering business is sufficiently covered with the right level of insurance.
Other Insurance options to consider
Part of the blueprint to a successful engineering business involves having the right insurances in place to cover all bases. In addition to Professional Indemnity insurance, you may also like to consider protecting other aspects of your business, like your assets.
A comprehensive business insurance policy for engineers can provide cover for buildings, contents and portable equipment, protecting against insured events like fire or theft.
Ensuring the things that matter most to your business should not only give you peace of mind but financial assistance when you need it most.
Having appropriate business insurance coverage can help protect your business from unexpected risks. If you are currently insured, take the time to make sure you have the right level of cover in place and that you are not under or over-insuring.
The cost of a Professional Indemnity insurance policy*
There are factors that an insurer may consider when calculating the cost of a Professional Indemnity insurance policy. No two engineering businesses are going to be the same, and policy premiums will vary as a result. Here are some of the main factors that insurers assess when pricing a policy.
- The type of engineering services or advice your business provides
- The size of your business and turnover
- The level of cover you require
- Your claims history
While a growing business is always a good sign, with more dollars in the bank, an increased workload and the need to hire more staff to keep up to date, you may notice an increase in the premium for your PI insurance as a result. The increased volume of work can be viewed by insurers as an increased risk that something could go wrong.
What level of cover do you need for your engineering business?
When considering what level of insurance cover you will choose for your engineering business, ask yourself the following:
- Do you have any legislative and or industry association requirements? A minimum level of cover may be required.
- What is the size of the contracts that you accept- does your selected limit provide enough financial protection to cover the legal costs and awarded damages if you were found liable?
- Do the contracts you work under require a minimum level of cover?
- The number of employees you have, generally the more employees you have, the higher the limit of cover you will require.
Know the details
While all claim scenarios will be subject to the policy’s terms and conditions, you need to be careful your insurance policy reflects the needs of your profession and your particular business, as some ‘different’ insurance policies may exclude engineering activities (in whole or in part).
* Standard subject to Ts and Cs disclaimer
Please note the information contained in this article is general only and should not be relied upon as advice