What Insurance Do You Need For an Engineering Business?

Professional liability insurance (errors and omissions coverage) protects engineering firms when design errors, calculation mistakes or inadequate specifications cause client financial losses. Client contracts typically require this before project work begins. Most engineering firms need $1 million to $2 million per claim with a $2 million to $3 million aggregate, though complex projects often require $5 million or higher limits.

Real-Life Coverage Scenario: A structural engineering firm miscalculated load requirements for a commercial building's support beams. The error surfaced after construction finished, requiring $385,000 in beam replacement, $127,000 in demolition and reconstruction, and $93,000 in project delays. The client sued for $605,000 plus $78,000 in legal fees. Professional liability coverage paid the full $683,000 claim.

General liability policies cover third-party injuries and property damage during engineering operations, including site visits, client meetings and office accidents. Commercial leases and client contracts typically mandate this coverage. We recommend $1 million per occurrence with a $2 million aggregate for most firms, though projects on large construction sites may need $3 million to $5 million.

Real-Life Coverage Scenario: An engineer left equipment near a construction site stairwell. A subcontractor tripped over it, fell down the stairs and fractured his wrist. Medical treatment cost $42,000, lost wages reached $18,000, and the worker sued for $95,000. General liability covered the $155,000 settlement plus $31,000 in legal costs.

Required by law in most states once you hire employees. Workers' comp covers medical expenses and lost wages for work-related injuries, including office accidents, vehicle collisions during site visits and occupational illnesses. Your state sets minimum coverage amounts based on payroll and employee classifications.

Real-Life Coverage Scenario: A civil engineer suffered severe whiplash and a herniated disc when rear-ended while driving to a project site. Surgery, physical therapy and specialist visits totaled $94,000. Four months of missed work added $52,000 in lost wages. Workers' comp covered all $146,000 plus $28,000 for vocational rehabilitation.

Cyber liability insurance protects firms from data breaches, ransomware attacks and loss of proprietary designs stored digitally. Coverage includes breach notification, credit monitoring, legal expenses and regulatory fines. Engineering firms storing CAD drawings, client data and sensitive project files should carry $1 million to $3 million in coverage.

Real-Life Coverage Scenario: Ransomware encrypted an engineering firm's servers, locking up proprietary designs for eight active projects and data for 200+ clients. Recovery required $83,000 in forensic investigation, $47,000 for system restoration, $34,000 in client notification, and the three-week shutdown cost $126,000 in lost revenue. Cyber liability covered all $290,000.

Commercial auto insurance is required by law in 49 states for business vehicles. A $1 million combined single limit with comprehensive and collision coverage meets state requirements and most client contracts. This covers liability when employees cause accidents and damage to vehicles carrying surveying equipment or testing instruments.

Real-Life Coverage Scenario: An engineer ran a red light rushing to a project meeting, causing a three-car collision. The accident produced $67,000 in medical bills, $41,000 in vehicle damage to other cars, $33,000 to repair the firm's vehicle, and $19,000 in damaged surveying equipment. Commercial auto covered the entire $160,000 except a $1,000 deductible.