Engineering Insurance

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electrobuzz

Member
Location
Portland, OR
I just recently passed my electrical engineering PE examination and want to start stamping my own designs. Where can I get a reasonably priced insurance for errors and omission?
 
rbalex

rbalex

Moderator
Staff member
Location
Mission Viejo, CA
Occupation
Professional Electrical Engineer
It is a somewhat specialized policyl but generally start with you homeowner's policy - or any other policy you hold. They probably won't provide it themselves but can direct you to someone who does
 
gadfly56

gadfly56

Senior Member
Location
New Jersey
Occupation
Professional Engineer, Fire & Life Safety
electrobuzz said:
I just recently passed my electrical engineering PE examination and want to start stamping my own designs. Where can I get a reasonably priced insurance for errors and omission?
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You may find that what you consider reasonable and what the insurance industry considers reasonable differ somewhat :roll:! I have a friend in the insurance industry, and asked casually what such coverage might cost me if I where to "hang out my shingle" as you seem to be doing. Her off-the-cuff estimate was $5,000 to $10,000 per annum for some basic coverage (I think about a million per occurance). As others have said, find a broker and prepare to do a lot of forecasting. When you undertake a project, what is your exposure? The typical AIA contract flows everything down and away from the architect and owner. If a $50 million dollar project is seriously delayed because you goofed the size of the substation, everyone and their granny is going to want a piece of you!
 
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rcwilson

Senior Member
Location
Redmond, WA
A highly respected EE in our area ran a small (3-4 employee) electrical engineering business specializing in commercial buildings and light industry. He told me that he did not carry E&O insurance. His house was in his wife's name and he did not have a lot of other assets. While he was very careful in his work, there were times when lawsuits threatened. He would send his financial statement to the lawyers. Without the "deep pockets" of an insurance policy, the lawyers saw it wasn't worth their time to pursue him for what little money they could get.

But he could have lost the business with a simple error. Maybe he was lucky, but he retired after 35 years and sold the company to his employees.
 
gadfly56

gadfly56

Senior Member
Location
New Jersey
Occupation
Professional Engineer, Fire & Life Safety
rcwilson said:
A highly respected EE in our area ran a small (3-4 employee) electrical engineering business specializing in commercial buildings and light industry. He told me that he did not carry E&O insurance. His house was in his wife's name and he did not have a lot of other assets. While he was very careful in his work, there were times when lawsuits threatened. He would send his financial statement to the lawyers. Without the "deep pockets" of an insurance policy, the lawyers saw it wasn't worth their time to pursue him for what little money they could get.

But he could have lost the business with a simple error. Maybe he was lucky, but he retired after 35 years and sold the company to his employees.
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Must be one of those guys who can run out on a 6" beam 20 stories up with no fall harness! The problem is that without E&O insurance, if someone can make a case for negligence, not just a mistake, they could pierce the corporate veil and go after his personal assets. If he lives in a community property state, I believe they could go after his 50% share of the house too.
 
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BJ Conner

Senior Member
Location
97006
Keep paying the premium...

Keep paying the premium...

E & O insurance is only good as long as you pay the premium. Do the work this year and if something goe south in 10 or 15 years the insurance won't help you if you are not currently covered.
Check with your lawyer.
Some general contractors and bigger A&E firms can cover you under their insurance- but make sure you get it in writing.
 
gadfly56

gadfly56

Senior Member
Location
New Jersey
Occupation
Professional Engineer, Fire & Life Safety
BJ Conner said:
E & O insurance is only good as long as you pay the premium. Do the work this year and if something goe south in 10 or 15 years the insurance won't help you if you are not currently covered.
Check with your lawyer.
Some general contractors and bigger A&E firms can cover you under their insurance- but make sure you get it in writing.
Click to expand...

You raise a good point. E&O is also going to be somewhat time dependant. To insure against claims from a 5 year old project, you would secure "Completed Operations" coverage. My father-in-law was the lead accountant for McBride for many years. As he explained it, there was an annual pow-wow going over all the recently completed projects and figuring the total value of the projects and how far back they want the coverage. I think their general cutoff was 10 years. Anything older than that, they figured there was a vanishingly small likelyhood of a viable claim coming up.

My company covers me under their E&O policy. If I left the company, any projects I worked on would be covered under their Completed Operations coverage.
 
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