Engineer & Architect Insurance: Cost, Coverage, & Providers

Architects and engineers need insurance to cover risks specific to their businesses, such as negligence claims for design flaws. While there’s no single engineer and architect insurance policy, business owners can match common commercial policies to their risks. Professional liability insurance and a business owner’s policy (BOP) usually costs $2,000 to $4,150 annually.

Architects and engineers have highly specialized insurance needs. The Hartford understands these needs and has architect and professional engineer insurance that covers the risks. Complete a short online questionnaire to receive a quote in minutes.

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How Architect & Professional Engineer Insurance Works

When you buy insurance for engineers and architects, you’re getting multiple policies that cover risks specific to your profession. One common risk is accusations of negligence like design flaws that cause a building collapse. That’s typically covered by architect professional liability. Because the risk is severe, these policies run between $1,500 to $3,500.

Architects and engineers face other, less serious risks too. They have business property that can be damaged or destroyed and offices where clients might suffer an accident. Business property like equipment and office space is covered by commercial property. Third-party accidents are covered by general liability. Insurers often combine these policies into a BOP. It provides both coverages in a convenient, affordable bundle.

Top Engineer and Architect Insurance Providers

Selecting the best architect insurance provider is often a matter of finding the combination of premium, policies, and coverage terms that suit your business. This list highlights quality providers that offer a range of professional engineer insurance and service options that can do just that.

The Hartford

The Hartford is a perennial favorite for small business owners, architects, and engineers included. The firm offers a broad range of professional engineer insurance and offers online quotes.

The Hartford is a good choice for growing architecture firms. First, it offers a management liability package. However, it also has a strong workers’ compensation policy that includes a payroll billing option that is timed to your payroll schedule. This way, you pay premiums based on your actual premium instead of an estimate.

Hiscox

Hiscox is a small business insurance specialist. The company prides itself on understanding the risks in specific industries and providing customized coverage to its clients. Quotes are instantly available online after a brief application.

Hiscox offers professional liability policy options that may be attractive for small firms, including special limits and a variety of defense structures. Moreover, architects can pay premiums in monthly installments for no extra charge.

Travelers

Travelers is a large, well-known insurance carrier that uses independent agents to distribute its products. This can be an advantage because it means the company has sound financials and broad product offerings. Travelers offers basic coverage, such as general liability, commercial property, and workers’ compensation.

Architects and engineers who want to build a relationship with an insurance professional who can help them buy the appropriate coverage should try Travelers. While you can’t get an online quote, but you can find a local agent.

The Hanover

The Hanover is another large carrier that distributes its policies through a network of independent agents and brokers. While the company works with businesses of all sizes, it currently offers coverage in more than 500 small commercial classes.

The company recently enhanced its professional liability product with a series of endorsements for architect insurance policies. Some of the highlights include coverage for remediation, reputation protection, withheld client fees, and crisis management consultations.

Victor O. Schinnerer & Company

Schinnerer, as an underwriting management agency, has the authority to price and issue policies for insurance carriers. It’s used this capability to create insurance programs for architects and engineers for more than 60 years.

This may be one reason the American Institute of Architects (AIA) partnered with Schinnerer to cover its members. AIA members get a 5 percent premium credit on professional liability policies through Schinnerer.

Types of Architect & Engineer Insurance Policies

Engineer and architect insurance refers to a group of policies designed specifically for the industry. For instance, the high risk and cost of negligence lawsuits make engineer professional liability insurance a common purchase. Many architects and engineers also qualify for BOP, which combines general liability and commercial property. BOPs typically cost $200 to $500 for architects.

Most Common Types of Professional Engineer and Architect Insurance

General Liability Insurance for Architects & Engineers

General liability is a fundamental insurance policy that covers third-party allegations of bodily harm and property damage. A third party is essentially anyone who doesn’t work for you like a client. If a third party claims you’re responsible for their injuries or damages, general liability usually covers the cost of your defense.

For example, let’s say a client visits your job site and falls through an incomplete wall. General liability insurance pays for their medical bills and your legal costs if they sue. General liability also covers property damage. So, if the client also smashes their smartphone in the fall, general liability pays for its replacement.

Commercial Property Insurance for Architects & Engineers

Commercial property insurance covers the property you use for business, like an office you own and the equipment, furniture, and fixtures within it. The policy pays the insured amount minus your deductible when these items are damaged by covered events. You can use the payout to repair or replace the damaged property.

Depending on your policy, property insurance typically covers damage caused by:

• Fire
• Theft
• Vandalism
• Windstorm
• Hail

Many architects and engineers can combine general liability with commercial property insurance into a BOP. Insurers designed BOPs to get small, low-risk businesses fundamental insurance policies at a lower rate. Every insurer has its own standard for what constitutes small and low risk but, in general, look for a business with fewer than 100 employees and less than $1 million in revenue.

Professional Liability Insurance for Architects & Engineers

Professional liability insurance, also called architect errors and omissions (E&O) insurance, covers your legal defense if clients accuse you of negligence. When a client says your work caused them financial loss, architect professional liability pays to investigate the claim and defend you in court.

Some example of allegations architects and engineers face include:

• Errors or omissions, such as a mistake in calculations or a failure to submit a change order
• Shoddy workmanship, like designing a drainage system that causes overflow
• Failure to deliver on contracted services, such as missed deadlines, budget overruns, or substituting materials

Unfortunately, accusations of negligence are common for engineers and architects, and defending against them can be expensive. This makes professional liability insurance an essential coverage for the building design industry.

Cyber Liability Insurance for Architects & Engineers

Cyber liability insurance covers first- and third-party data breaches. Most building design professionals require first-party cyber liability. This policy is designed for businesses that store client data, like email addresses. Third-party cyber liability insurance is for businesses that are responsible for the systems that store data. It may be more appropriate for a software engineer.

Depending on your policy, cyber liability may cover costs like:

• Legal fees
• Judgments and settlements
• Investigation costs
• Client notification
• Public relations
• Credit monitoring.

According to an IBM study, the average cost of a data breach is $148 per lost or stolen record. This makes cyber liability coverage essential for any business that stores client information.

Additional Engineer & Architect Insurance Types

In addition to the common professional engineer liability insurance policies, architects, and engineers may also need:

• Workers’ compensation insurance: Most states require employers to carry workers’ compensation; it pays for an employee’s on-the-job injuries and work-related illnesses, plus it reimburses them for lost wages
• Commercial auto insurance: Commercial auto covers your responsibility for car accidents; most states require business owners with vehicles to carry at least liability coverage for their cars, but you can add other coverages
• Umbrella liability insurance: Umbrella liability insurance extends the coverage of your other liability policies, like general liability, employer’s liability, and commercial auto; if coverage can’t extend the limits on E&O insurance

Commercial auto and workers’ compensation are usually state-mandated coverages, and workers’ compensation is only required if you have employees. However, some business owners opt to get workers’ compensation for themselves to protect their assets if they can’t work. Umbrella liability is not required, but it can help you meet contractual requirements. It’s sold in $1 million increments and is usually more affordable than adding to your general liability limits.

Architect & Engineer Insurance Costs

Insurers consider multiple factors to determine professional engineer insurance premiums. Paying claims is one of the most important considerations. For instance, architects don’t see a lot of foot traffic, so their BOPs tend to be $500 – $650. But architects see more negligence claims so adding professional liability increases the total to $2,000 to $4,150.

Architect & Engineer Insurance Costs & Deductibles by Type

As you can see from the chart, professional liability insurance is usually the most expensive type of architect insurance. That’s because the insurer’s risk of paying an expensive claim is high. However, architects and engineers don’t have a lot of expensive equipment, so they usually qualify for a BOP.

9 Key Factors in Determining Architect Insurance Premiums

Insurers consider multiple factors to determine architect insurance premiums. Some of these are specific to your business like the services you offer or the number of employees you have. Others are about policy terms. Each insurer weighs these factors differently. However, knowing what they are can help you estimate your own costs.

5 Factors That Increase Architect Insurance Costs

Getting architect insurance isn’t like ordering off a menu. You get to select the policies you need, but you seldom see the prices before you make a request. As a result, architects and engineers sometimes have a sticker shock when they see the final bill. You can avoid that unpleasantness by knowing the characteristics that increase your architect insurance costs.

Here are a few of examples:

• The type of property insurance: Replacement cost value property insurance pays the amount it costs to replace your damaged property; it usually costs more than actual cash value coverage, which deducts depreciation
• The limits you select: Setting higher limits increase your coverage, but insurers charge more for this
• The services you offer: An architect who provides design services, building supervision, and other services usually pays more than one who only provides schematics
• Your revenue: Insurers assume that owners with more revenue have more to lose, and that can increase your professional engineer insurance costs
• Your specialty: Certain specialties like civil and structural face a greater risk of lawsuits, so insurers charge them more

Even though you don’t want to pay too much for professional engineer insurance, you also don’t want to end up underinsured. Try to strike a balance between what you want to pay and how much you did to cover.

4 Factors That Decrease Architect Insurance Costs

Most business owners want to keep costs down whenever they can. That is tricky when it comes to insurance because you don’t have much control over the prices. However, you can usually reduce your professional engineer insurance costs with just a few simple steps.

You may be able to decrease costs by:

• Mitigating your risk: Your claims history is almost always a major factor in your premiums; following safety procedures, using written contracts, and installing security systems are examples of good risk management habits
• Sticking with one insurer: Insurance companies often give discounts long-time customers and customers that buy more than one policy, especially if the policyholder makes few claims
• Selecting higher deductibles: Higher deductibles reduce the financial burden on your insurer if you file a claim; remember that it does the reverse to you, so pick a deductible you can afford even in times of trouble
• Moving your location: Property insurers consider both the size of your office and its geographic location; changing either of these can sometimes reduce your costs

Affordable insurance is the goal. However, remember, you also need appropriate coverage. Skimping on architect insurance can put your business at risk.

Tips on Getting Engineer & Architect Insurance

No one expects to get sued, but it is unfortunately common for engineers and architects. This makes getting the appropriate architect insurance essential.

Here are three tips to help you get covered.

1. Get Covered Sooner Rather Than Later

Owners of small architecture firms sometimes skip insurance, especially E&O coverage, because they either think it’s too expensive or not necessary. However, getting insured is almost always more affordable than being sued. Plus, you may find large clients require liability insurance before they’ll hire you.

Arthur Schwartz, deputy executive director and general counsel for the National Society of Professional Engineers, says

“Many engineers choose to “go bare” because they think their area of specialty isn’t risky. Certainly, some fields have more liability exposure, like civil, structural, and geotechnical, but there’s always a risk of being sued. If you don’t have professional liability insurance, your personal assets may be exposed.”

2. Work With an Agent

When you work with an insurance agent, you get someone who is trained to evaluate risks and find policies that cover them. Because they know the products, they can usually keep you from being over or underinsured, find discounts you wouldn’t necessarily know about, and help you understand the specifics of your policies.

3. Manage Your Risk

Insurance is an important part of protecting your business but so is risk management. Simple steps like using contracts and documenting communications keeps you and your clients on the same page. Many insurers consider risk management practices when determining your premium too.

Architect & Engineer Liability Insurance Frequently Asked Questions (FAQ)

We’ve listed a few of the most commonly asked questions about architect and engineer insurance here.

Can Professional Engineers Be Held Personally Liable?

Some states have laws that make licensed professionals, including engineers, personally responsible for any negligence or wrongful acts they commit. This can be true even when they have formed a corporation. As a result, business owners need sufficient limits on their E&O insurance to protect their assets.

Do I Need Insurance for Contractors I Work With?

Architects and engineers can be held responsible for their subcontractor work. To protect their business, they need to either add subcontractors to their general liability insurance or require subcontractors to carry their own. The first is usually the more expensive choice. As for professional liability, most policies exclude subcontractors.

What Is A&E Insurance?

Professional liability insurance has many names. In some industries, it’s called E&O while building professionals often refer to it as A&E insurance, for architects and engineers liability. Each of these names describes policies that cover the policyholder’s legal defense when accused of negligence.

What’s the Difference Between Occurrence and Claims-made Liability Insurance?

With an occurrence policy, claims are covered as long as the triggering event occurs during the life of the policy. Claims-made policies only pay if the policy is in force at the time of the triggering event and the claim. Professional liability policies are usually written on claims-made forms. General liability is more often an occurrence policy.

The Bottom Line

General liability and commercial property may be fundamental coverages for architects and engineers, but they also need professional liability to cover their greatest risk. Negligence lawsuits are common in the industry and usually very expensive. Engineer and architect professional liability insurance can help small firms survive these accusations.

Architects and engineers need to work with an insurer like The Hartford that understands their risk. The Hartford works to customize its policies to your industry and can get you an online quote within minutes.

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