The engineering industry is all about developing and designing constructions and buildings. Because of the nature of this industry, there are more chances of accidents and uncertainties that are related to construction, including plant and machinery usage.
Engineering insurance is a special type of business insurance policy that covers a wide range of risks related to engineering. This is an extensive insurance policy that offers complete protection when it comes to risks like creating, designing, building, and working of any plant, machinery, or equipment.
Here’s what engineering insurance covers and why you should consider having it if you are running an engineering business.
The Difference Between Insurance for Engineers and Other Business Insurance
One of the first things to consider when thinking about engineering insurance policies is buying insurance that is specific to engineers. The reason is that the risks you and your employees face during the course of work are different from other professions.
In other words, if you opt for generic business insurance and you are running an engineering business, there is a big chance you won’t be fully protected and any liability claim you make could be rejected.
On the other hand, engineering insurance will protect you in your work while operating specialist machinery and equipment and working with computer software and hardware.
One of the perks of having engineers insurance is that you can tailor it to the industry and the type of work you undertake. You could run a business in the power and energy industry, or biomedical processing, for example — you just need to make sure you specify exactly what you do when choosing engineering liability insurance.
Besides insuring your workforce and equipment, choosing the right insurance is important because some contracts could depend on it. For example, a project of yours could be deemed too risky to get started without the right insurance.
What Does Engineering Insurance Cover?
Engineering insurance has always been focused on covering plant and large machinery used in the construction and manufacturing industries. The first insurance for engineers covered the work they performed inspecting machinery and plants, a type of business that can also bring many health and safety risks.
Dangerous machines used in the engineering industry have been causing accidents for decades. In these accidents, the workforce was often hurt and sometimes even killed. Because of this, engineers responsible for inspecting machinery identified the risks associated with various types of machines. Ultimately, inspection and identifying risks have helped in preventing accidents from occurring to some extent.
Luckily, today engineering insurance covers both inspected and non-inspected machines and equipment. There is a wide range of machinery and equipment that can be covered, such as:
- Process machinery
- Power plant
- Printing and paper-making machines
- Computer and software systems
Together with inspection services, professional engineer insurance can cover many risks. The most common type of inspection is the inspection of lifting equipment or pressurized equipment in the workplace. It is crucial for safety that this equipment complies with statutory regulations and requirements.
Lifting equipment usually includes a forklift, an escalator, passenger or goods lift, hoist, crane or goods trolley — basically anything that can lift goods or people. On the other hand, pressurized equipment most commonly includes a compressor or boiler (hot water boilers, steam equipment, and boilers such as café boilers).
That said, engineer insurance ensures that you satisfy the health and safety requirements on-site. Business owners who fail to comply with these requirements are at a bigger risk of being personally exposed to legal actions due to various breaches and financial compensations for injuries.
Engineer insurance also covers business interruption, machinery movement, and deterioration of stock.
Here’s what an “all-risk” engineering insurance includes:
- Theft and burglary
- Negligence and human errors
- Strike and riot
- Lightning, fire, storm
- Landslide, rockslide, and subsidence
- Excess voltage, short-circuiting, arcing
- Damage that occurred due to collapse, impact damages, or foreign objects
- Any other unforeseen and accidental damages
There are, however, exclusions to what an engineering insurance policy covers:
- Radioactive contamination
- Nuclear radiation
- War invasion
- Glass breakage
- Consequential loss
- Defects of design
Engineering Insurance for Electrical Equipment
Professional liability insurance for engineers will also cover the electrical equipment and machinery you use for your business purposes.
Usually, business owners choose a sum that reflects the value of the machinery. The other option is to replace it on an “as new” basis. However, you should keep in mind that once your equipment goes beyond a certain age or keeps it and uses it outside, the “as new” option might not be possible.
Engineering insurance should also cover equipment located outside your business premises, and you don’t usually need to itemize each piece of equipment.
In case you have special equipment you need to hire for a specific project you are currently working on, your engineering insurance should cover it as well. In this case, insurance covers:
- Theft or loss
- Sudden damage
- Accidental damage
Types of Engineering Insurance
Depending on the type of equipment or the industry, there are several different types of engineering liability insurance:
Machinery Breakdown Policy
Machine Breakdown Policy covers losses that happened due to unexpected or sudden damage of various equipment. Usually, a Machinery Breakdown Policy covers both external and internal damages.
Internal damages usually include defects of lubrication, overheating, electrical damage, and others. For example, if you own a factory for kitchen appliances, the Machine Breakdown Policy can be one of the most valuable policies when it comes to protecting your assets.
Plan All Risk Insurance
Plant All Risk engineer insurance covers unforeseen damages and loss of operational tools. In the engineering industry, all the equipment that the workforce uses in construction is prone to wear and tear because of its exposure to extreme conditions and the environment. Those who operate or own machinery or engineering plants and wish to secure them should consider having this type of engineering insurance.
Electronic Equipment Policy
Electronic Equipment Policy protects the devices and systems that can attract low power and voltage. That includes UPS, stabilizer, computer, and medical equipment such as ultrasound machines and x-ray machines.
Under this engineering insurance policy, the insurance provider is responsible for the cost of repair and replacement required to reinstate the previous state of the devices and equipment.
Erection All Risk
An Erection All Risk plan covers the erection of plant and machinery structures. The insurance policy also covers installation, machinery testing, and commissioning. The equipment that is usually covered here includes bulldozers, excavators, trenchers, graders, loaders, pavers, and other on-site machinery used for construction.
Contractor’s All Risk Coverage
Contractor’s All Risk Coverage covers the contractors and offers financial protection against loss and damages that occurred during the construction of projects. This type of engineering insurance policy also covers damage and loss to equipment and plants. The focus of this policy, however, is on-site construction-related uncertainties.
That said, Contractor’s All Risk Coverage is ideal for buildings, airports, and flyovers, to name a few. Some Contractor’s All Risk Coverage policies may also cover fire accidents that may happen during ongoing construction work.
Advance Loss of Profit Insurance Policy
Advance Loss of Profit Insurance Policy covers higher financial losses and costs that occurred due to delays in a construction or infrastructure project.
Boiler Pressure Plant Insurance Policy
Boiler Pressure Plant Insurance Policy covers the replacement and repair of equipment. This engineering insurance policy also covers the damages to third-party property and bodily injuries caused by collapse or explosion.
While the Factories Act requires that certain equipment is inspected and certified at intervals (for example, lifting plant, pressure vessels, and steam boilers), engineering insurance is the additional step to ensuring your engineering business and workforce are safe.
Engineering Errors and Omissions Insurance
Architects and engineers also need to be prepared for consequences in case their clients accuse them of making mistakes. This is especially true because lawsuits can be expensive. Engineering Errors and Omissions insurance can help you cover legal fees that might cost you a lot of money and even put your business out of commission.
General Liability Insurance for Engineering
General Liability is an essential type of coverage for engineers as it protects against third party injuries and damages. In case an employee damages an expensive piece of equipment while working on the clients’ premises, General Liability could help cover the damage.
Engineering Professional Liability Insurance Cost
The cost of engineers insurance depends mostly on the type of policy you choose, the risks, and the value of your property.
Errors and Omissions Insurance Costs for Engineers
The median cost of E&O insurance for engineers is about $155 per month. The median cost eliminates high and low outliers and provides a better representation of typical engineer insurance costs compared to the average value.
General Liability Insurance Costs for Engineers
The median cost of general liability premium is about $40 per month or $475 annually.
Business Owner’s Policy Costs for Engineers
The median cost of a business owner’s policy is around $45 per month or $550 per year.
Finally, there are many situations in which business owners could benefit from having engineering insurance. As a business owner, you need to ensure that you are covered for all unexpected scenarios. By not being properly covered, you may end up being personally liable for costs and legal fees, or even substantial claims.
Interested in finding out more about how you can insure your business property? Here’s why East Insurance Group can help you find the best coverage for your business property.