Someone once said that engineers change the world. While scientists may know things, it’s engineers that do them. They harness scientific and technological advancements and turn them into practical applications that help the world progress. If you are an engineer, whether that’s mechanical, civil, chemical or electrical, or indeed a subbranch of any of those, that’s quite an accolade. As an engineer, you can take a lot of job satisfaction when you look back at what you’re achieving in your career.
But not every engineering project goes to plan. What happens when things go wrong? Many projects are hugely expensive and the stakes are high. This is why engineers must have insurance to protect themselves and the work they do.
We’ve written in more general terms before about insurance for engineers, what it covers and why it’s important. But let’s turn the spotlight on one type of insurance in particular. Here we take a closer look at Professional Indemnity Insurance to understand a bit more about how it protects you.
What is Professional Indemnity Insurance and what does it cover?
Professional Indemnity insurance (known as Errors and Omissions insurance in the States) covers you if someone accuses you of making a mistake either in your designs or the advice you’ve given. If this costs your client money, they can claim against you for financial compensation. Equally, if their allegations are false, your PI insurance will pay the legal defence costs to prove this is the case.
The protection provided by different Professional Indemnity products may vary slightly from provider to provider so it’s important to check the details to make sure the policy you’re opting for is right for you. In broad terms, most policies will include the following:
- Negligence or dishonesty – where a client accuses you of being negligent or dishonest in your work or advice and it has a negative impact on their project.
- Defamation – this includes libel and slander, where the character of a person or organisation is damaged.
- Intellectual Property Infringement – also called copyright breach, this is when someone claims that the work you have produced is a copy of someone else’s work.
- Claims expenses – any legal costs or settlement fees associated with a claim made against you will be covered.
- Information Security & Privacy Liability – this covers legal issues caused by data breaches or hacking.
Why is it important for Engineers to have Professional Indemnity Insurance?
For engineers in the UK, it’s a legal requirement to have Professional Indemnity insurance in place. As we said earlier, many of the projects you work on will be expensive and potentially risky too. If anything goes wrong, it can be catastrophic. Take the tragic example of the Grenfell Tower disaster. While the blame is being laid at the door of a number of different businesses, two of those involved were engineering firms. One is a building services engineering business, the other a firm of mechanical engineers.
Professional Indemnity Insurance will protect you and your clients if a mistake you make results in the project failing or being compromised, leading to a financial loss.
How much cover do you need?
The amount of cover you need will very much depend on the type of work you do. If you work on large scale, high value projects for multi-national corporations, it’s likely that you’ll need a high level of protection. If you work on smaller engineering projects, you’ll probably be looking at lower limits of cover. Sometimes clients will dictate the amount of cover you need by setting out the amount of cover required within the contract.
What other insurance should you consider?
While Professional Indemnity insurance clearly provides vital protection for engineers, there are other types of insurance you might want to consider.
Here’s an overview of some of the other insurance products for you to think about:
Public Liability – if you visit a client’s premises or visitors come to your workplace, you’ll need Public Liability insurance. This will provide protection if they are injured while on your property or their belongings are damaged by you, either at their premises or yours.
Employer’s Liability – if you employ anyone, it’s a legal requirement that you have Employer’s Liability insurance in place.
Buildings – if you have your own office, you’ll need to protect the building, in case of fire, flood or other damage.
Contents – this will cover your office furniture and any business equipment, such as computers, tablets and printers.
Legal Expenses – if you get caught up in a legal dispute, such as a tax or IR35 investigation, Legal Expenses cover will pay your legal costs.
Business Interruption – if you are prevented from working for a period of time, for example if you suffer a flood or a supplier lets you down, Business Interruption insurance will cover your loss of income for your downtime.
Cyber Liability – this covers your business online. If you are hacked, if data is stolen or your systems are compromised, Cyber Liability will get you back up and running.
If you need help and support in getting your insurance please contact us at firstname.lastname@example.org