Engineers have a lot to contend with when it comes to Business Insurance and claims. The reality is, no business or person is perfect, so accidents do happen, and given the litigious society we live in today, claims come with those unforeseen accidents. It's important to have the right policy in place for coverage, but it's also good to have a plan in place to reduce insurance claims. Once you have a contract in place, here are 3 Ways Engineers can Reduce Insurance Claims.
1. Quality Control: Another set of eyes on your work.
Some people do not like to have others check their work, however, it can go a long way when you do. After all, we are all humans, and none of us are immune to human error. Engineers are under a tremendous amount of pressure these days when it comes to projects. Have a senior person, or qualified person, within your organization check your work. If that is not possible, consider the services of a qualified consultant. Yes, this might be an additional cost to the project that could cut into profits or add more time, but it's better to be safe than sorry. Two sets of eyes are better one.
2. Communicate. Keep the lines of communication open and manage expectations.
The last study I read, communication was the number one reason for engineering claims in the industry. This isn't surprising since another study showed the number one thing clients want from design professionals and engineers is, you guessed it, better communication. Review and manage the scope or work, schedule of work and the cost of work with your client. Find out the clients preferred form of communication and secondary form of communication. If there are problems, respond proactively and promptly. Make sure to return phone calls within 24 hours (obviously earlier the better), even if it's just to say you are still working on it. Let them know they haven't been forgotten by simply telling them, I haven't forgotten about you. I know when people tell me this, I appreciate it. Nobody likes to feel like they've been forgotten.
3. Document. Document. Document.
We've all heard this one before, but it's always a good reminder. Always document when you've presented or discussed the scope, schedule, cost and/or any other important information. Things change, make sure to document them. It's easy to forget phone conversations these days when we're taking a call while driving or multitasking. Request an email for any changes. Always consider what is really being asked and do not give an off the cuff answer. If they are major changes to the project, request a meeting. After the meeting, send a follow up email titled "Action Items" with documentation of the change in scope of work and ask the client to confirm receipt of the email.
These are just a few things that might help reduce insurance claims. If you would like more information on ways to reduce claims, please let me know. Be aware that contractors will most likely go after the design professional if they are brought into any kind of law suit, so it's very important to try to reduce your exposure. We represent insurance carriers that offer training on this subject, and other value-added services, your firm will benefit from. Some of these services include webinars and contract review. If you are not getting this from your current carrier, you should ask your agent or broker why. We work with a lot of engineers when it comes to Business Insurance and would be happy to help with your needs. Be sure to read Insurance for Engineers for more information related to this subject.
Always remember, failing to plan is planning to fail. And hope is not a plan.
Commercial Insurance Agent
Engineers need Business Insurance. Not just General Liability Insurance, but also Professional Liability Insurance, also known as Errors & Omissions (E&O). I work with a lot of Engineers and they are some of the most meticulous and ethical people I know when it comes to their projects, but no matter how meticulous a person is, mistakes can happen. Or maybe you don't even make a mistake, you're just brought into the lawsuit. Insurance for Engineers can provide coverage and defense for businesses in the engineering industry.
For example, a civil engineer might design a water retention pond to provide flood control and it fails. When it fails, it floods a handful of homes or businesses that it backs up to. Since the civil engineer signed off on the design drawing as PE (Professional Engineer), they could easily be held liable. Especially since the drawing is considered a legal binding contract. Was it the engineers fault? Or was it a construction defect? The general contractor and the civil engineer are probably going to be pointing fingers at each other, which is not uncommon. Now it's time for the insurance companies to get involved. Even if you are not at fault, you could potentially be brought into the lawsuit. This is the time when a Professional Liability Insurance policy, specifically one tailored to an engineering firm's needs, would be important to have in place.
As far as coverage goes, the following are a few insurance policies an engineer should consider when purchasing business insurance (notice I said, "a few", as there are more):
As far as limits of liability (also known as the coverage amount) for Professional Liability Insurance, the starting point is usually $1,000,000, however, if assets or risk exceed this, you should definitely consider more. Sometimes I get asked how much coverage is enough, which is an excellent question. Unfortunately, given today's litigious business landscape, there's really no way of knowing if it's enough coverage. You might start by asking yourself, what is the most I could be sued for, plus defense costs. Some engineering firms have limits just to satisfy certain contracts, which could leave them underinsured, if the contract requirements are lower than what they might need. I would definitely recommend scheduling a policy review with an agent to discuss increasing limits or broadening coverage, especially as you grow and your assets grow. Make sure to ask about the retention amount (also known as deductible). Typically this will be between $2,500 and $10,000. Maybe more, maybe less, so make sure you ask, so you know before you have a claim. Also consider different deductible options. I would recommend asking about First Dollar vs Straight Deductible.
Insurance for engineers doesn't have to be complex. When it comes to finding a professional liability insurance company, I represent many companies that insure engineers. You really want to look for an insurance carrier that has a program specifically designed for engineers. Many of these special programs offer many value-added services that your typical insurance carrier might not offer. Here are few of the companies I go to for an engineering insurance quote:
Chubb Insurance Company
Travelers Insurance Company
Admiral Insurance Company
Hiscox Insurance Company
If you're looking for Insurance for your engineering firm, please feel free to contact me. Perhaps you just have questions and don't need a quote, feel free to reach out to me as well. Whether you are a civil engineer or a mechanical engineer, I would be happy to help.
Commercial Insurance Agent