Looking for opinions on if I need errors and omissions insurance 1

[nuuvox000]

Hello, I just got licensed a few weeks ago in HVAC engineering. What are your opinions and advice on getting errors and omissions insurance? Just a little bit of background on my company and position. We're a small design/build HVAC and plumbing company.

My lead PE doesn't have E&O; he said that he tried getting it years ago and most companies wouldn't cover him because we were too small (It's just him and myself in engineering). He said he thinks we should be covered under the company's contractor insurance. He said that in 15 years he hasn't had anyone even come close to suing for design issues because we can usually just take care of any mistakes we make since we're the installers as well.

I realize we're not structural or anything but can anyone offer advice on this? I want to make sure I'm covered in case I get sued. Thanks!

 

[phamENG]

Not sure if they look at mechanical engineers differently, but I got E&O for myself, and it's just me. So the too small argument seems a bit odd.

Contractor's general liability and E&O are not the same thing and the GL policy will not cover errors and omissions in the designs. Being the installer as well can help - if the problem is relatively small. But what happens when you accidentally under-size the units for a large building, and it's not caught until the building is nearly complete? Now you not only have rework to do for replacing the units, you could have finishes that need to be removed and replaced to accommodate your rework, and you could have liquidated damages for delaying the building opening and costing the owner collectable rents. That could get very expensive. In that instance, I would imagine the GL policy would look and see that the specified units were installed and installed correctly and say: "sorry, it's the the engineer's fault. Take it up with his/her E&O carrier."

Now should you get it? No. Your company should get it and it should be made very clear in your employment contract, agreement, or whatever (employee manual would probably work) that all work done by you for the company is covered by their insurance and that they will indemnify you for any suits brought against you for work done for the company.

If you're worried about it, get in touch with a lawyer specializing in professional practice and construction.

 

[EnergyProfessional]

No idea what country you are in and what a license in "HVAC engineering" means. But typically the employer is responsible for errors you make. they may yell at you, fire you, or give you a smaller desk as punishment. But the employer is responsible to pay for your mistakes. The client has a contract with your employer, not you. If you make errors on purpose, or gross negligence, or design in a field you are not knowledgeable in, then your employer may be bale to sue you to recover some of the cost. But in those cases an insurance may not pay anyway.

If in your country the insurance has to be in your name, your employer still should pay for that or even handle the contract. That is most of the point to be employed as opposed to having your own firm. I guess talking to a local insurance agent, and/or lawyer or your local professional association may be helpful.

 

[nuuvox000]

Great points, thank you very much.

 

[Ron]

What phamENGR says is exactly the case. The size of the firm does not matter. If you are providing professional engineering services to the public, you need it. CGL and PLI are completely different as phamENGR noted. Get the coverage, even if minimal.

I carry $1 million in PLI and $1 million in CGL. All at a cost of less than $15k per year. Worth it.