Engineering business risks

Cover that reflects the work your firm actually performs.

Engineering businesses can combine professional advice, design, inspection, certification, project management, site work and the supply or installation of equipment. The insurance program should be reviewed against the firm’s real activities, revenue sources, project profile and contractual requirements. The right structure will depend on the business and the terms, conditions, exclusions and limits available from insurers.

We work with engineering consultants and design firms to review professional indemnity and related commercial covers, identify information insurers need and compare material terms. Insurance is subject to underwriting and policy wording; no policy responds to every claim or contractual obligation.

Engineering disciplines and services

We can discuss insurance requirements for firms working in areas such as:

• Civil, structural and geotechnical engineering
• Mechanical, electrical and building services engineering
• Environmental, water, process and chemical engineering
• Industrial, manufacturing and automation systems
• Infrastructure, transport, utilities and energy projects
• Fire safety, façade, acoustic and sustainability consulting
• Surveying, inspection, testing, commissioning and technical reporting
• Design coordination, project management and client-side advisory work
• Multidisciplinary practices and specialist engineering subcontractors

Insurer appetite can vary by discipline, project type, design responsibility, location and the extent of site or construction work. A clear description of each service helps insurers assess the exposure accurately.

Professional indemnity for engineering firms

Professional indemnity insurance is commonly considered by engineering practices for claims alleging a negligent act, error or omission in professional services. Whether a particular claim is covered depends on the policy wording and the circumstances. An engineering PI review may include:

• The definition of professional services and whether it reflects all declared activities
• Limit of indemnity, aggregate limit and any reinstatements
• How defence costs are treated within or outside the limit
• Retroactive date, continuity arrangements and prior acts provisions
• Exclusions or sublimits relevant to specific disciplines, project types or jurisdictions
• Contractual liability, fitness-for-purpose obligations and performance guarantees
• Subconsultants, joint ventures, consortium work and outsourced design
• Claims-made notification requirements and the process for reporting circumstances

These points are matters for policy comparison and insurance placement. Contract interpretation and legal advice should be obtained from a qualified lawyer where required.

Related business insurance

Depending on the firm’s operations, an insurance review may also consider:

• Public and products liability: third-party injury or property damage exposures associated with office, site and operational activities, subject to policy terms and exclusions.
• Property and business interruption: office contents, computers, specialist equipment and the financial impact of insured property damage.
• Cyber insurance: selected cyber events, incident response and associated costs, subject to the policy’s definitions, limits and exclusions.
• Management liability: certain management, employment and statutory liability exposures for eligible businesses, subject to cover terms.
• Motor fleet and equipment: business vehicles, mobile plant or equipment where required and accepted by insurers.
• Workers compensation: statutory workers compensation arrangements applicable to the firm’s employing jurisdictions.

Not every cover is appropriate for every practice. Some activities may require separate policies or specialist placement, and policy limits should be assessed against the business’s circumstances.

Projects, contracts and insurance requirements

Engineering firms may work for property owners, builders, government bodies, utilities, manufacturers and other consultants. Project terms can include insurance limits, evidence-of-cover requirements, additional insured requests, waivers of subrogation or extended indemnities. These requirements can affect placement and may not be available in every policy or market.

We can review the insurance requirements presented to the broker and explain how they relate to available policy terms. A broker’s insurance review is not legal advice, a contract review or confirmation that every contractual obligation is insured. Where a contract creates legal obligations or asks the firm to accept unusual liability, obtain legal advice before agreeing to it.

What insurers may need to understand

A well-prepared submission helps insurers assess the business and can reduce avoidable follow-up. Information commonly requested includes:

• Engineering disciplines, service descriptions and fee or revenue split
• Annual fees, largest projects, typical project values and maximum contract values
• Client sectors, project locations and any work outside Australia
• Design responsibility, checking and approval processes, and quality assurance controls
• Use of subcontractors, subconsultants, joint ventures and overseas design resources
• Site attendance, construction supervision, certification or installation activities
• Standard contract forms and any unusual indemnity or insurance requirements
• Current policy schedule, requested limits, claims history and known circumstances

All material information should be disclosed to insurers as required. Notify the insurer or broker promptly if a claim or circumstance may need to be reported under a policy.

Reviewing an existing engineering insurance program

A renewal review can compare the current program with the firm’s present services, client requirements and project mix. We can examine the schedule, limits, excesses, key exclusions, sublimits, continuity details and insurer requirements, then explain material differences between available terms. Premium is one part of the comparison; the policy response and conditions also matter.

Engineering insurance questions

Does an engineering consultant need professional indemnity insurance?

Many clients and project contracts require engineering firms to maintain PI insurance, and the cover is commonly considered for professional services exposures. Whether it is required or suitable depends on the firm’s work, contracts and circumstances.

Can one policy cover several engineering disciplines?

Some insurers can consider multidisciplinary firms, subject to underwriting. The proposal should accurately describe each discipline and service; coverage depends on the policy wording and the activities accepted by the insurer.

Does professional indemnity cover a promise that a design will be fit for purpose?

Speak to our experienced brokers for advice.

What details help obtain an engineering insurance quotation?

Start with the firm’s services and revenue by discipline, project values, client sectors, geographic reach, subcontracting arrangements, requested limits, current insurance and claims or circumstances information.