Liability Insurance, Anyone?

[Timmy!]

Have any of you intrepid PEs checked into sources and costs of liability insurance (I've also heard it referred to as "errors and omissions" insurance)?

I'm interested in finding providers of such coverage as I get started in business, and was curious as to how much coverage I should get and how much I can expect to get gouged for it.

 

[Slugger926]

It is now called Proffesional Liability Insurance rather than Errors and Omissions here in the U.S.

I checked into it with State Farm, and am ready to add it to my list of policies with them if I ever find a project to work. They weren't too bad for the amount I was looking for.

 

[EdinNO]

I know a guy I went to college with who has a firm. It may depend on your industry.

I think he is paying $20K to $30K but all of his work is in high-dollar refineries and such. He told me that for the first year, the insurance agent charged them as though his industry was commercial buildings and that was only about $3K per year.

My boss told me that he used to do design "on the side" while working elsewhere. He didn't have insurance at the time, but said it was about $5K per year. This is in the commercial building industry as well, so it sounds somewhat consistent with what my friend told me for this industry.

Ed

 

[DVINNY]

That is some serious $$ for insurance.

 

[Slugger926]

That is some serious $$ for insurance.

It depends on how many millions you want to be insured for. $1 million to handle small projects is very reasonable ($300 to $500 per year). But firms that are working larger projects need a lot more insurance.

Think of it this way, if you design a small pond upstream of a subdivision, the failure of that pond could result in flooding dozens of houses. It may only take destroying 5 houses to reach the $1 million mark.

Or a goof on a telecom project may cost $1 million per minute until the equipment is back up and running.

 

[DVINNY]

Great point.

 

[civengPE]

How much coverage would you guys think is ok for small civil side work. Ie. traffic control plans, windstorm inspections, trench safety plans etc.?

I am talking with my agent right now and I have no Idea of how much to ask for.

 

[rleon82]

This is great thread, let's keep it going.

 

[rnorth]

i was just qouted 1500 - 2000 / year for 500,000 worth of coverage by poole professionals. this is for gross receipts less than 60k/year. she said civil structural and residential have seen a lot of claims lately - more risk, higher premiums.

 

[RIP - VTEnviro]

^ Our company's E&O provider puts on a seminar for all our professional staff once or twice a year. They talk about markets to stay away from and other general stuff to keep our premium costs down.

Apparently, one of the worst ones in this area is condo/townhouse projects. They said they've gotten a lot of claims on those projects in the past couple years.

 

[lavadave]

I'm curious to hear some follow up from some of the posters on this thread and see what they ended up getting as far as insurance goes. I'm hoping to go out on my own as soon as possible after I become licensed, so the insurance issue is looming. I'm also looking for a good lawyer and would appreciate any advice on how to find one in the Philly area.

 

[GCracker]

i was just qouted 1500 - 2000 / year for 500,000 worth of coverage by poole professionals. this is for gross receipts less than 60k/year. she said civil structural and residential have seen a lot of claims lately - more risk, higher premiums.

This sounds about right, but it grows exponentially as you get to $1mil coverage and above. Rates are also dependent on receipts vs. coverage requested.

Also, as stated above, it depends on your liability. If something you design screws up, is it likely someone will be killed? If so, your rate is higher because not only will you be sued criminally, you will be sued in civil court by a grieving family. The if's, and's, buts, etc..etc go on and on.

Contact several insurance companies to get quotes. If your not sure about how much coverage you need, ask them what others in your field are getting vs. their yearly volume, etc. and make an educated decision.

 

[McEngr]

Also, as stated above, it depends on your liability.  If something you design screws up, is it likely someone will be killed?  If so, your rate is higher because not only will you be sued criminally, you will be sued in civil court by a grieving family.  The if's, and's, buts, etc..etc go on and on. 
Contact several insurance companies to get quotes.  If your not sure about how much coverage you need, ask them what others in your field are getting vs. their yearly volume, etc. and make an educated decision.

Gcracker,

From what you've seen, are the hourly rates for structural work great than, equal than, or comparable to other disciplines like, for instance, HVAC or land development?

 

[GCracker]

I have no idea what HVAC's or Civil's (site) pay in insurance or bill per hour.

 

[McEngr]

I have no idea what HVAC's or Civil's (site) pay in insurance or bill per hour.

I only ask because it seems that the pay increase should also increase for the risk. However, the risk doesn't seem to equal the reward for structural engineering. It's too bad I like str. engr so much. Otherwise, I'd be a dentist.

 

[grover]

Wow, this is really disheartening! I had visions of doing consulting on the side for a few $k, maybe $5k over the course of the year for various small projects. I can't afford $3k for insurance for that! Are there places that will insure someone like me for just a few hundred dollars?

Might my homeowner's policy cover anything? I know from talking to my agent that it covers something like $200k of liability if I'd happen to crash my model airplane into a semi and cause a highway pile-up...

Who are some good places to get liability insurance?

 

[tmckeon_PE]

For small jobs, it is my, and the guy I do most of my work for, opinion that insurance isn't needful. Should I (or you) get more work (ie, more visible), insurance is needful. Drainage if done reasonably well, will not draw much legal difficulty. Usually, claims seem to be more of a public safety issue kind of thing (visibility at corners and such).

Doesn't mean that you aren't at risk (the person I do most of my work for and I had a long talk about that).

Just my '.02'

 

[tmckeon_PE]

In Florida, there are not many insurance companies that cover this. CNA is one that does. If anyone knows of other companies and have experience with them, please post.

Thanks.

 

[rleon82]

Any quotes yet from insurance company's TM?

 

[kevo_55]

I spoke about this in a thread similar to this one.

Here is a PDF of something that was in the NSPE December '06 issue. Honestly, I got it from the online version of the magazine. It contains a whole lot more.

Since it is so big, I divided it into 2 parts.

Mods, if I'm not doing something that is kosher please edit my posts to suit.