How Much Does Engineer Professional Liability (E&O) Insurance Cost?

If you're an engineer or you own an engineering firm that performs work for others, it's normal to wonder:

• What happens if a mistake is made and I get sued?
• What if someone accuses me of an error I didn't make?

Engineers are frequently pulled into claims when there's a construction defect, design issue, or product problem, even when the engineer's role was limited in the matter. And because engineering work is technical, it can be expensive to defend yourself in court. You may need expert witnesses, detailed documentation, and significant time to explain what happened to people who don't work in your field.

At A Glance

• Engineer E&O (professional liability) helps pay legal defense costs and certain damages when you're accused of a professional mistake in your engineering services.
• Policies are typically claims-made, meaning coverage depends on when the claim is made and reported and your retroactive date and prior acts coverage.
• Cost depends heavily on your discipline, revenue, project mix, claims history, contract terms.
• The pricing examples below are illustrative samples to show how premiums can vary, not a quote or a promise of cost.

What Does Engineer Professional Liability (E&O) Cover?

Engineer professional liability insurance, often called "Errors and Omissions (E&O)", is a financial safety net for claims alleging your professional services caused someone financial harm.

Example scenarios:

• You are a structural engineer that worked with an architect to approve a home add-on that later did not hold up to a windstorm.
• You calculate a beam size and someone claims the calculations were incorrect after the project is completed.
• You recommend a drainage plan and a client alleges the plan led to damage or rework costs.
• You are a geotechnical engineer who approved building plans which later had issues as a result of the compaction.

Most policies are intended to respond to allegations of a wrongful act, typically defined as an act, error, or omission in the performance of your professional engineering services.

What the policy typically pays for:

• Defense costs (attorneys, experts, court costs) to defend you against a covered claim.
• Damages you are legally obligated to pay (up to the policy limit), such as settlements or judgements you owe.

The defense costs detail matters. Defending engineers against claims are expensive due to the technical and complex nature of the field. It is arguably the most important coverage on this policy for most firms.

What Professional Liability Typically Won't Cover

Engineer E&O is not "covers everything" insurance. Common boundaries include:

• Pure contractual liability where you agree to obligations beyond professional negligence. Getting in a terrible contract does not obligate the insurer to pay extra because you signed up for additional liabilities beyond your normal legal obligations.
• The projects and services listed on any exclusion endorsement. Many insurance companies put an endorsement on the end of the policy stating the project types and services that they will not cover. Generally you will not get through underwriting if you are doing any of those services, but if you do, the policy won't cover it. Common exclusions are geotechnical engineering, marine engineering (including projects on harbors, jetties, docks, piers, and wharves), amusement rides, and various other listings. Ask your agent if your policy has any of these exclusions.
• Claims that apply to other policies. General liability, workers comp, auto liability, and professional liability all cover different things and don't cover similar claims as each other.

Who Needs Engineer Professional Liability Insurance?

You need E&O coverage if:

• Clients hire you specifically for engineering services (design, analysis, plans, calculations, consulting, inspections, and similar work)
• Your contracts require you to carry E&O
• You stamp or seal drawings or deliver professional opinions that others rely on.

What Affects The Cost of Engineer E&O Insurance?

Pricing can vary dramatically. Insurers commonly look at:

1. Engineering discipline and services performed: Some disciplines and services historically generate more frequent or more severe claims.
2. Revenue, payroll, and firm size: Higher revenue and larger payroll often correlate with more projects, more exposure, and more people whose work could be alleged in a claim.
3. Claims history (and even incidents): Prior claims, payouts, or patterns of issues can increase cost or reduce available options.
4. Coverage limits and deductible or self-insured retention (SIR): Higher limits usually mean higher premium. A higher deductible or SIR can lower the premium, but increases what you pay out of pocket before insurance responds.
5. Claims-made structure (retroactive date, full prior acts, and tail coverage): Most engineer E&O is claims-made, meaning you need continuous coverage and retroactive dates can matter a lot.
6. Project types and client mix: High-risk projects, public entities, or complex and high-value work can increase premiums.

Sample Cost of Professional Liability for Engineers

Below are examples of annual premiums showing how pricing can vary by discipline, limit, and state. These are examples only and your specific firms pricing might differ for a variety of reasons.

Civil Engineering Firm ($1m Limit)

Structural Engineering Firm ($1m Limit)

Electrical Engineering Firm ($1m Limit)

Mechanical Engineering Firm ($1m Limit)

How Coverage Limits Affect Premium (And Why It's Not Always Linear)

In general:

• Increasing your limit increases your premium.
• The increase is not always proportional. Doubling the limit does not always double the premium.
• However, increasing your revenue does generally increase your premium linearly (although larger firms with clean loss history can get a lower rate per $1000 in revenue).

Project Types And Services That Can Increase Insurance Cost

Absolutely. Certain projects and services tent to increase risk, which can increase premium. These are still insurable, but sometimes with different pricing, terms, or underwriting requirements.

Higher-risk project types

• Residential condominiums
• High-rise buildings
• Bridges and tunnels
• Mines and quarries
• Harbors, jetties, docks, piers, and wharves
• Dams, reservoirs, and levees
• Amusement rides
• Nuclear facilities

Higher-risk services

• Construction Management at Risk
• Geotechnical engineering
• Process engineering
• Construction material testing
• Construction and site safety consulting
• Ground testing, soils, and surveys of subsurface conditions
• Marine engineering
• Pro-purchase home and building inspections
• Phase III and environmental remediation services
• Asbestos remediation and lead abatement