SWG PL: E&O a Logical Choice for Mechanical and Electrical Engineers

June 17, 2020

If an engineer makes a mistake, or is accused of making a mistake, errors and omissions (E&O) is the only type of business insurance that will cover their legal costs if they are sued.

But according to Canadian Underwriter Magazine, more engineering professionals and professional service businesses are opting to only carry as much coverage as they are required to meet certificate of insurance (COI) and contractual demands. (1) In other words, they are working with inadequate coverage.

E&O is so important for mechanical and electrical engineers because it’s hard to predict what could go wrong in the large and complex projects they handle. This type of insurance is designed to cover the miscellaneous risks that aren’t included in a CGL policy alone. Instead, SWGL PL offers a combined CGL and E&O policy so that engineers have the tailored coverage they need.

Exposures for Mechanical and Electrical Engineers

1. Client claims a mistake was made

Errors claims occur when the design is wrong, while omissions claims mean that the engineer failed to include something in their design. When working with complex projects, human error is all too common, and even a simple miscalculation can lead to a costly lawsuit.

An example of this could be when a mechanical engineer is accused of designing a faulty product which then must be recalled, or when an electrical engineer is accused of designing a flawed system which leads to an electrical fire.

2) A client accuses the engineer of negligence

A client is likely to file negligence claims when they feel their complaints have been ignored, and they feel dissatisfied with the service.

Clear and open communication throughout the course of the project can help engineers avoid claims like this, especially when the project is delayed, goes over budget, or runs off track due to unforeseen complications. This includes ensuring that the engineer and the client are on the same page about scope of project, budget, and timelines at the start of the project.

Breach of the standard of care is another common reason for a lawsuit, where the engineer is accused of not acting in accordance with what a reasonable person would do, given the circumstances. Mechanical and electrical engineers can be held liable for allegedly giving bad information or recommendations to their clients that result in harm to a person or damage to property.

The more informed a client is throughout the ups and downs and unexpected problems of a project, the less likely they will be to sue when it’s over.

3) Client dissatisfaction due to outside risks

Hiring an independent contractor can provide an extra set of eyes to ensure the work is error-free. Engineers should ensure, though, that any independent contractors are properly vetted and appropriately insured. The last thing they need is a lawsuit because of a third party’s bad advice or shoddy work.

SWG PL: E&O Architects & Engineers (A&E)

SWG PL – Architects & Engineers Professional Liability insurance offers a packaged E&O and CGL policy that covers a wide range of classes of business. Tailored E&O coverage protects small to large firms from a broad range of A&E risks. SWG provides an A&E PL policy at competitive rates, bringing extensive knowledge and underwriting experience in professional liability.

Who else we cover:

SWG PL covers more than just mechanical and electrical engineers. If you don’t see the class you’re looking for, contact us:

Structural Engineers

HVAC Engineering

Civil Engineers

Building Designers

Software Engineering

Landscape Architects

Interior Designers

Chemical Engineers

Process Engineers

Mining Engineers

Land Surveyors

And many more

Visit our website for more details.

Content is current as of the date of broadcast and is subject to change without notice.

Sources:

  1. https://www.canadianunderwriter.ca/brokers/opinion-are-your-clients-buying-enough-eo-coverage-1004178991/