Whether you are starting a new firm or already established, we have a specialist knowledge of the professional indemnity market for Engineers (ACE and many similar associations). We offer a range of services to help new and established firms obtain their mandatory cover quickly and at a competitive premium. Our service can include;
- Access to a range of 'A' rated insurance companies
- Competitive premiums
- Cover tailored to the requirements of the firm
- Free legal advice on warranties etc with certain insurers.
- Risk management guidance and insights
The insurance market for engineers' professional indemnity insurance (PI) is large, with many insurers and their brokers battling for market share. They all offer policies at different premiums and with subtle but important differences.
So it's important to have some understanding of how this market works to be able to make an informed decision on which product is best for your firm.
- How much does it cost
- What is the insurance 'rate'?
- Getting the best quote and cover
- How is the premium calculated
- Level of cover required
- The PI marketplace for Engineers
- Do good impressions count?
- Examples of claims
- Examples of low, medium and high risk work
- Buying online
- Why us
How much does it cost?
In normal market conditions, rates for engineers professional indemnity insurance typically range between 1% and 5% of fee income, depending on the usual risk factors and market competition. Rates can also be higher or lower than this depending on the work undertaken, the claims history etc. Rates can be lower for new start firms as there is no history or legacy to insure.
You should also bear in mind that minimum premiums will also apply which can vary considerably between insurers. For example, a minimum premium for an engineer could be £500 or £1,000, depending on the insurer selected. The minimum premium is the insurance company's starting premium for insuring any risk.
It's not good practice to buy professional indemnity insurance online as a 'commodity' purchased only on its price. However good the policy wording is, professional indemnity is commercial insurance and coverage disputes can still occur. Most policies will require some tailoring to match the policyholder, so use a specialist broker to get some good advice.
What is the insurance 'rate'?
The insurance 'rate' is the percentage of fee income or turnover an underwriter requires to provide the insurance cover. It is decided upon by using the usual risk factors including type of profession (engineering, architecture, surveyor etc), the breakdown of activities, any prior claims etc. to calculate the 'rate'. This is then applied as a percentage to a firms rateable fee income or turnover. For example, if an underwriter decide they require a rate of 1% to insure an engineering firm with a fee income of £ 500,000, the annual premium quoted will be £ 5,000 (net of insurance tax).
Getting a quote for professional indemnity insurance
Engineers professional indemnity insurance is usually purchased from a specialist broker. A good broker lowers the premium cost as well as providing valuable advice and support throughout the insurance period, especially on claims. For a quotation or some free advice please contact us.
How is the premium calculated?
The rating of a consulting engineer or any professional indemnity risk can be quite a complex process. Underwriters need to be highly skilled and require a significant amount of information to enable them to provide a quotation which accurately reflects the risk they are pricing. Premiums are calculated based on many factors which will include:
- Past claims history
- Fee income
- Qualifications and experience
- Activities and work undertaken
- Partners or directors to staff ratios
To assess the risk, an underwriter will require a fully completed proposal form which they will consider in detail. They will also look at the firm's website or they may even look deeper online into a firm's background.
Level of indemnity required
Deciding on an adequate level of cover for your business is not an exact science, so we have put together a guidance note to help you in assessing the correct level of cover for your company. Please download a copy of our guide on the Limit of Indemnity.
The PI market for Engineers professional indemnity
Since 2020 the PI insurance market has hardened, which is a natural occurrence of the global insurance market cycle. Premiums have risen and compliant cover has been more difficult to obtain and Architects and Engineers in particular, have been heavily affected. Basically, this was because of claims outweighing premium incomes, but Covid also added fuel to the market difficulties.
In terms of premium value, the construction and design sector is estimated to be worth in the region of £ 600 million of premium income to the insurance market.
However, the insurance market for engineers is now showing clear signs of 'softening' once again and competition for premium income is increasing.
Create the right impression
The presentation of your business to insurers is more important than you may think. It will influence the prospective insurer's perception of your business and therefore if the information is badly represented, this could influence both their judgement and the premium you pay. Quite simply, they are considering the risks that your business may pose.
Ensure that all of your information is clear and supply this to them with any brochures your provide and details of your website. It all goes to create the best impression of your business. Read our guidance on Risk Presentation.
Examples of professional indemnity insurance claims
Professional negligence claims against consulting engineers are common and can be extremely costly, even when the engineer is not at fault.
What work is considered high risk?
All the professional work carries some risk and for architects this can vary considerably dependent on the area you work in. The list below gives an indication of where the majority of professional indemnity claims come from in your profession:
- Low risk - town planning, feasibility studies, interior design.
- Medium Risk - architectural design
- High Risk - geotechnical, airports, bridges
Buying online
Professional indemnity is complex commercial insurance. When arranging this cover, most firms will require some tailoring of their policy to ensure it provides exactly the right protection for their business. This may be a small tweak to the policy or something more substantial....things that really matter when a claim occurs! Therefore, buying this type of commercial insurance online is NOT recommended and specialist advice from a broker should always be obtained.
Why us?
We have a wealth of experience in arranging professional indemnity insurance for Engineers. With over 30 years' market experience we have the level of understanding necessary to represent your firm professionally and confidentially in discussions and negotiations with insurers. Many engineers rely on us to arrange robust PI insurance companies to protect their business and their hard earned reputations. We only use 'A' rated insurance companies to deliver long term insurance and stability and reliability,as well as value.
We are independent and not tied to to any schemes or insurers, so you can be sure that any advice is impartial. Like you we are highly professional and we don't annoy firms with calls from pushy sales people. For more information about this subject or a discussion with one of our experts, please call us on 0345 251 4000.
This guidance note is intended for information purposes only. Whilst all care has been taken to ensure the accuracy of the guidance note it is not to be regarded as a substitute for specific advice. This guidance note shall not be reproduced in any form without our prior permission. © Professional Indemnity Insurance Brokers Ltd