Texas Engineer Insurance: A Guide
·
10 minute read
If you are an engineer practicing in Texas, you are working in a paradox. On one hand, the state offers one of the most robust economic environments in the country, fueled by massive infrastructure projects, energy production, and rapid urbanization. On the other hand, you are operating within a legal framework that is distinct from virtually any other jurisdiction in the US.
Texas law operates on a "gatekeeper" philosophy. It offers significant statutory protections to engineers, but only if you follow the rules precisely. One misstep in a contract or a lapsed insurance policy can expose a firm to liabilities that are unique to the Lone Star State.
Whether you are a Civil, Structural, Electrical, or Mechanical engineer, here is a comprehensive guide to understanding risk, liability, and insurance in Texas.
Get A Engineer Insurance Quote
Same-day quotes for most firms. Request a quote online or give us a call.
Get A Callback
Our Offices Are Currently Closed
Why Texas is a Unique "Liability Landscape"
Texas is not necessarily "hostile" to engineers, but it is unforgiving. The state combines physical risks with rigorous legal statutes.
1. The Physical Environment (The Soil Problem)
Texas geology creates a high-risk environment, particularly for civil and geotechnical engineers. The presence of highly expansive clay soils (like the Eagle Ford formation) creates a perpetual risk of foundation movement. In fact, a substantial volume of litigation in Texas involves slab-on-grade failures where plaintiffs blame the engineer for underestimating the soil’s "Potential Vertical Rise."
2. The Statutory Ceiling (Chapter 130)
In many states, clients can bully engineers into signing contracts that promise "the highest standard of care" or "best practices." In Texas, the law protects you against this.
Under Chapter 130 of the Civil Practice and Remedies Code, Texas has codified the "Standard of Care." It limits your duty to "ordinary care." Crucially, if a contract tries to force you to a higher standard, Texas law renders that provision void and unenforceable. This prevents clients from creating uninsurable warranty obligations.
3. The Gatekeeper (Chapter 150)
This is your primary shield. Chapter 150 requires that if someone sues a licensed engineer, they must file an affidavit from a third-party expert (holding the same license) contemporaneously with the lawsuit. If they file the suit without this "Certificate of Merit," or if the expert isn't qualified, the case can be dismissed with prejudice (meaning it cannot be refiled).
The Risks: Breakdown by Discipline
Not all engineers face the same exposures. Here is what the liability data says about your specific field in Texas:
- Civil & Geotechnical: The highest frequency of claims comes from foundation failures and drainage/flooding issues. Post-Hurricane Harvey, "flood liability" has become a major litigation trigger.
- Structural: The biggest risks are "delegated design" (e.g., steel connections) and forensic reporting. If you act as an expert witness for insurance claims (hail/wind) and produce a biased report, you can be sued for negligence.
- Electrical: Liability here is often catastrophic (bodily injury/death). Texas courts are strict about the National Electrical Safety Code (NESC). Violating clearance requirements (e.g., power lines too low) is often considered "negligence per se."
- Mechanical: In Texas's humid climate, HVAC design is a litigation magnet. "Negative pressure" designs that draw humid air into wall cavities, causing mold, are a frequent source of multi-party construction defect suits.
- Product Engineers: Unlike service providers, product designers face Strict Liability. If a manufactured product is deemed "unreasonably dangerous," you can be held liable even if you weren't negligent.
The Insurance Policies You Need
Transferring risk is your financial survival strategy. Here are the policies that form the core of a Texas engineering firm's defense.
1. Professional Liability (Errors & Omissions)
This is non-negotiable. It covers damages arising from negligent acts, errors, or omissions in the services or work that you provide to your clients.
Important Note: These are "Claims-Made" policies. The policy must be active when the claim is made, not just when the work was done. Never let this lapse, or you lose coverage for all past work.
Defense Costs: Be aware that in most policies, defense costs are "inside the limits." This means legal fees erode your coverage limit. If you have a $1M limit and spend $500k on lawyers, you only have $500k left for the settlement.
2. General Liability (GL)
Often confused with Professional Liability, this covers physical risks rather than design risks. If a client slips in your lobby, or your surveyor accidentally knocks over a vase at a job site, GL pays the claim. It protects against third-party bodily injury and property damage that is unrelated to your professional engineering services.
3. Workers' Compensation
Texas is an outlier here: it is the only state where private employers can legally opt out of Workers' Comp (becoming "non-subscribers").
- The Trap: While opting out saves money upfront, it strips you of the "exclusive remedy" defense. If an employee gets hurt, they can sue you for negligence with almost no cap on damages.
- Best Practice: Most engineering clients will contractually require you to carry true Workers' Comp. It pays for medical costs and lost wages if an employee is injured on the job, regardless of fault.
4. Cyber Liability
Engineering firms hold high-value intellectual property, such as infrastructure blueprints and security schematics. Cyber policies cover you for data breaches, ransomware, and business interruption.
Top Insurance Carriers for Texas Engineers
Based on coverage breadth, financial strength, and claims expertise in the Texas market, these are the top contenders:
- LandesBlosch: A specialized independent brokerage serving Texas and the region. Unlike a direct carrier, they work with multiple top-tier insurance companies to shop the market for engineering firms, combining digital ease with deep construction and professional liability expertise.
- Berkley Design Professional: A dedicated division of W. R. Berkley Corporation focusing exclusively on architects and engineers. They are highly regarded for their "Better by Design" risk management program and specialized claims handling.
- Travelers: A dominant player for large A&E firms; known for sophisticated risk management, ability to offer all lines of coverage, and high limit offerings.
- The Hartford: Excellent for small to mid-sized firms. They turn around quotes faster than most carriers and offer quality coverages like "Rectification" coverage.
- Victor (formerly Victor O. Schinnerer): One of the longest-standing program administrators with deep industry expertise and contract review services.
Tips, Tricks, and "Gotchas"
If you are purchasing insurance or signing contracts in Texas, keep these strategic points in mind.
The "Fair Notice" Requirement
You should always negotiate a Limitation of Liability (LoL) clause in your contract (e.g., limiting liability to your fee or $50,000). However, in Texas, for an LoL to be valid, it must be CONSPICUOUS. It must be in bold, all-caps, or a contrasting color. If it's buried in the fine print, a judge may throw it out.
The 12-Year Rule
Texas has a Statute of Repose of 10 years (8 years for some highway projects). This means 10 years after a project is substantially complete, you generally cannot be sued for it. However, there is a grace period that can extend this by 2 years.
Tip: Do not purge your project files after 7 years. Keep all records for a minimum of 12 years to ensure you can defend yourself against "long-tail" claims.
Watch Your Indemnity Language
The Texas Anti-Indemnity Act (Chapter 151) prohibits you from indemnifying a client for their negligence.
Tip: Never sign a contract that says you will "indemnify the Owner for any and all claims." Tailor the language to say you will indemnify them only "to the extent caused by the Engineer's negligence."
Avoid "Fiduciary" Status
Texas law generally views engineering as an arms-length business transaction, not a fiduciary relationship.
Tip: If a contract calls you a "fiduciary," strike it out. Fiduciary duties (perfect loyalty) are uninsurable under standard Professional Liability policies.
The "Locality Rule" Matters
Standard of care in Texas is based on the "Locality Rule." Designing a foundation in the clay of North Texas is different than in the bedrock of the Hill Country. Ensure your insurance carrier understands that you need defense experts who know local Texas engineering practices, not just national experts.
About The Author: Austin Landes, CIC
Austin is an experienced Commercial Risk Advisor specializing in and leading LandesBlosch's design professional, real estate, and construction teams.