Costly Mistakes and Errors & Omissions Coverage for Architects and Engineers

Architects and engineers shoulder a tremendous amount of responsibility in the planning, designing, and implementation associated with constructing new buildings. One small miscalculation can throw the entire project into a tailspin, resulting in angry clients who may decide their only course of action is to engage those they hold liable for delays, errors, or non-completion of the project with what may ultimately be a costly lawsuit.
Architects and engineers errors and omissions (E&O) insurance will help to cover the company, or the individual, in the event that a client decides to sue, based on their belief that a service that was contractually promised was not delivered, or that it did not have the expected results. For architects or engineers, this is commonly referred to as a “professional liability” policy.


What exactly does E&O insurance cover?


Most E&O policies cover judgments, settlements and defense costs. Even if the allegations are found to be groundless, enormous sums of money may be needed to defend against the lawsuit. This could decidedly bankrupt a smaller company or individual and have a lasting effect on the bottom line of larger companies, not to mention the often-irreversible damage to a firm’s reputation. In short, this coverage provides protection in the event that an error or omission is deemed to have caused a financial loss for a customer or client.


Who needs E&O insurance?

This coverage is not restricted to architects and engineers alone. The range of individuals that may benefit from coverage includes doctors, lawyers, advertising agencies, commercial printers, Web hosting companies, and even wedding planners. Any business that provides a service to clients for a fee risks the likelihood of having some type of E&O exposure.


How serious is the need for coverage?

Because everyone is capable of making mistakes, even with the best, well-trained employees, and the best risk management practices in place, mistakes are still likely to occur. For example, a freight forwarder sends a shipment to the wrong city and it is a time sensitive shipment and their client ends up losing a sale or a customer, they will be expecting that the company they entrusted with this task will pay the loss.


By not purchasing architects and engineers errors and omissions insurance, a company can be taking a serious financial risk. These types of losses are not covered under a general liability policy, and choosing the right policy may require the help of an experienced insurance agent.

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