Professional Indemnity for Engineers – What is it?
The work of professional engineers involves the application of advanced skills in analysis and knowledge of science, engineering, technology, management and social responsibility to problem solving and synthesis in new and existing fields. This encompasses advance design and research, development of systems and products, manufacturing and field engineering and professional formation, in specialist practice or supervision and management. Professional Engineers need to be innovative and creative to develop the best possible solution. The engineer must frequently make balanced judgements between design refinement, cost, risk and environmental impact.
Therefore they owe a considerable duty of care to those engaging their services because of these special skills. The law requires that these persons exercise this required skill to an appropriate level expected by that profession. Professional Engineers are only human and mistakes do happen. Any financial loss, injury or damage arising from a mistake or failure by the Engineer to exercise the required level of skill, may mean that they may become liable to compensate that person who suffers a loss, damage or injury.
An Engineer may also be held to be liable for a mistake even though there was no negligence but has breached some relevant statutory legislation.
While people generally have a reasonable idea of what a dentist, lawyer or teach does, the scope of activities covered by engineers is more difficult to summarise. Professional Indemnity claims can come from the following activities performed by Engineers:
Installation and Commissioning
Maintenance and Testing
Design and Manufacture
Technical Sales and Marketing
Research and Development
What to look out for in your policy
The following gives an idea of some of the areas of coverage sometimes missed by an Insurance Broker not experienced in arranging appropriate Professional Indemnity for Engineers:
Bodily Injury and Property Damage Exclusions – severely restricts cover for Engineers. Have them deleted.
Retroactive Date – if the inception date is used, it will not cover any past work prior to this date. This is no problem if you have worked for someone else but is a problem if you have run your own practice as you will be uninsured for this work. Seek an unlimited date.
Profession Description – disclose all types of work you perform both past and present and any planned for the future. Otherwise if you do not declare not just what you do now, you may be without cover for certain claims.
Limits of Liability needs to factor in potential claims well into the future as the statute of limitations do not always apply in many Engineering claims.
“Claims Made” covers, which Professional Indemnity policies are, while covering you retrospectively means that if you stop working, you still need to maintain a policy to “run off” for not just the statute of limitations period, but even longer.
Who can help?
An Insurance Broker who specialises in Professional Indemnity can find the right Insurer for you with the most appropriate policy wording. Many insurers though have suffered with claims and have substantially increased their rates. However, there are still a lot of alternative markets that are keen to insure those who practise as Engineers.
An insurance broker’s role is to act as your representative and work in your interests, seeking the best cover at the best price for you with their skill, market knowledge and experience. Call a good one.
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