Known also as “errors and omissions insurance,” professional liability insurance protects design professionals while being sued for alleged mistakes or omissions made in the course of providing professional services. Professional liability insurance covers legal fees, settlements, and judgments arising from allegations of negligence, errors, or omissions.

If a mistake or omission made by a designer results in an alleged loss or damage for the client, the firm may be held liable and face a lawsuit. Even if the design firm has done nothing wrong, it still may have to spend a significant amount of money in court defense costs.

Professional liability insurance provides financial protection in these situations. It can cover the costs of legal defense, settlements, and judgments – up to the policy limits. This coverage can help architects and engineers avoid financial ruin due to a lawsuit.

Many clients require architects and engineers to carry professional liability insurance as a condition of doing business with them. This requirement helps to protect a client’s investments from mistakes made during the timeline of a project.

The cost of professional liability insurance for architects and engineers can vary widely depending on factors such as the size of the firm, the location, the specific disciplines offered, the level of coverage, and the insurer.

• 
  
• Design errors or omissions – if design flaws lead to property damage, bodily injury, or financial losses
• Professional negligence – where claims are due to failure to meet professional standards of care when providing architectural or engineering services
• Contractual disputes – which include breach of contract allegations, failure to deliver services as promised, and inability to meet project deadlines
• Copyright or intellectual property infringement – which are claims related to the unauthorized use of intellectual property, such as designs or plans belonging to others
• Misrepresentation – that is, accusations of providing inaccurate information or misrepresenting facts related to the project

It’s essential for architects and engineers to carefully review their insurance policies to understand the extent of coverage, the exclusions, the deductibles, and any additional endorsements or options available to tailor the policy to their specific needs. Working with an experienced insurance broker or agent helps to ensure adequate coverage at a competitive price.

It’s important to remember that the cost of professional liability insurance is a necessary expense that protects designers and their businesses from the financial risks associated with lawsuits or alleged claims made against their practice. While the insurance is an additional expense, it could ultimately save you money and protect the future of your business.

Professional liability insurance and general liability insurance are types of liability insurance that provide coverage for different types of risks.

Professional liability insurance is insurance coverage for professionals to cover claims of negligence, errors, or omissions occurring while providing professional services. This type of insurance is designed to protect professionals from financial losses resulting from claims (legitimate or alleged) of negligence or mistakes made while providing those services. Professional liability insurance is typically purchased by professionals such as doctors, lawyers, accountants, architects, engineers, and consultants.

General liability insurance provides coverage for claims of bodily injury, property damage, or personal injury that occur as a result of business operations. This type of insurance is designed to protect businesses from financial losses resulting from accidents that occur on their premises or as a result of their business activities. General liability insurance may cover things like slip and fall accidents, property damage caused by your business operations, or advertising injuries.

Generally, professional liability insurance provides coverage for claims of negligence, error, or omission within the scope of professional services. Policies range in their coverage limits and definition of “professional services,” and may include various endorsements to further expand a firm’s coverage. Each of these coverage factors will affect the annual premium pricing. The way the policy limits are calculated or paid out can also change from policy to policy.

Here are some examples of what professional liability insurance may cover:

• Legal fees and defense costs: If a client sues a professional for an alleged mistake made while performing professional services, professional liability insurance can help cover the costs of mounting a legal defense, including attorney fees, court costs, and other related expenses.
• Settlements and judgments: If a professional is found liable for a mistake or error, professional liability insurance can cover the costs of settlement or judgment, up to the policy limits.
• Breach of contract: Professional liability insurance can provide coverage for damages resulting from a breach of contract between the professional and the client.
• Errors and omissions: Professional liability insurance can cover claims resulting from errors, omissions, or mistakes made while providing professional services to a client.
• Negligence: Professional liability insurance can provide coverage for claims of negligence, such as failing to meet professional standards of care or failing to provide services in a timely or competent manner.

Professional liability insurance typically does not cover intentional acts or criminal behavior. In addition, policies usually have exclusions or limitations. It is best to have a licensed insurance professional review your quote options and help you compare various policies to ensure that you are purchasing the maximum coverage for the most competitive price.

Yes, errors and omissions insurance is a type of liability insurance that provides coverage for claims of negligence, errors, or omissions made during the performance of professional services. It is another name for professional liability insurance or malpractice insurance.

While there may be some differences in the specific terms and conditions due to differing policies, errors and omissions insurance and professional liability insurance are generally used interchangeably to refer to insurance coverage that protects professionals from claims of negligence, errors, or omissions occurring while providing professional services.

Alongside professional liability insurance, there are several other types of insurance that architects and engineers should consider in order to protect their business:

• General Liability Insurance: General liability insurance provides coverage for claims of bodily injury, property damage, or personal injury that occur during business operations. This type of insurance is important for firms who have an office or meeting space where clients or other visitors may be present.
• Cyber Liability Insurance: Cyber liability insurance provides coverage for losses resulting from data breaches, cyberattacks, or other cyber incidents. Firms who store sensitive client data, such as personal or financial records, are particularly vulnerable to cyberattacks and should purchase this insurance.
• Employment Practices Liability: This insurance coverage is for claims of employment-related discrimination, harassment, or wrongful termination. Architects and engineers with employees or who regularly work with contractors could be at risk for these types of claims.
• Workers’ Compensation Insurance: This type of insurance is paid by the employer to subsidize compensation for lost wages and medical treatment for employees who’ve sustained injury or illness due to their job.

A firm’s specific insurance needs depend on a variety of factors, including the size of the firm, the types of clients served, and the services provided. Working with an experienced insurance consultant who specializes in business insurance will help determine the appropriate types and levels of insurance coverage for your business.