Why continuous professional indemnity insurance is essential for engineers
In the world of engineering, precision and foresight are crucial. Yet, when it comes to professional indemnity (PI) insurance, some engineers take a project-by-project approach – only purchasing coverage when required to secure a contract, and cancelling it once the project is complete.
While this might seem like a cost saving measure, the reality is that lapses in insurance coverage have the potential to expose you to financial risk. This effectively leaves you uninsured for the services provided under contract should a notification alleging professional negligence be brought against your company – either directly or indirectly.
If a claim arises and you are uninsured, you may inadvertently find yourself in breach of contract.
The nature of professional indemnity claims
Unlike other types of insurance, PI insurance operates on a claims made basis. This means that the policy must be active at the time a claim is made – not just when the work was performed. Engineering projects often have long tail liabilities, meaning that defects or issues may not come to light until years after project completion. If your insurance is not in place when a claim arises, you could be left personally liable for legal and compensation costs and potentially leaving you in breach of contract.
The risks of going uninsured
Engineering is a field where minor errors can have major repercussions. Whether it’s a structural design flaw, an error in calculations, or a failure to comply with regulatory standards, any oversight can result in claims long after project handover. Without ongoing PI insurance, you may be leaving yourself vulnerable to:
- Contractual issues If a claim arises and you are uninsured, you may inadvertently find yourself in breach of contract
- Legal costs Defending a claim can be costly, even if you are not at fault
- Compensation payments If a claim is upheld, you may need to pay damages, which can be financially devastating
- Reputational damage A lawsuit can impact your ability to secure future contracts and affect your long term professional standing
Apply a prudent approach: Continuous insurance
Maintaining continuous PI insurance ensures that you are protected from historical claims while demonstrating professionalism, a prudent approach to risk management and reliability to clients. A few key benefits include:
- Seamless protection You remain covered for past work and beyond project completion
- Compliance and credibility Many clients and professional bodies expect continuous cover as a mark of best practice
- Cost management Continuity can help manage premium costs more efficiently than reapplying for insurance sporadically
- Tax benefits PI insurance premiums may be tax deductible, helping to offset costs
- Client confidence Continuous cover reassures clients that you are a reliable professional, providing them with peace of mind
- No delays Keeping your insurance active means you don’t have to rush to purchase cover when securing a new contract, avoiding administrative delays
If you cancel your cover, you may be saving money in the short term, but exposing yourself to risk over the long term.
Protect your future with EngInsure
At EngInsure, we understand the unique risks that engineers face. Our tailored professional indemnity insurance solutions ensure that you remain covered, no matter when a claim arises. By maintaining continuous insurance, you safeguard your business, your reputation and your financial future.
Don’t wait until it’s too late – speak to our team today about securing ongoing professional indemnity insurance that meets your unique needs.
The contained information is general advice only. It is not intended to take the place of professional advice. Before acting on this information you should consider the appropriateness of this advice to your particular objectives, needs and financial objectives. Contact Whitbread Associates Pty Ltd | ABN 69 005 490 228 | License Number 229092 trading as EngInsure Insurance & Risk Services for further information or refer to our website.
