By Jim Loughlin

More and more frequently, engineers are starting their own businesses or working on the side as freelancers. There is a big upside for starting a business with the potential for additional income and the freedom of selecting which projects to take on, but there are also significant risks. Aside from the pressures of ensuring your business succeeds and does high-quality work, there is also the unfortunate reality that there is a lot of liability for engineers.

For most engineers purchasing insurance, it tends to be something that they are looking to simply cross off their list. Most people would prefer to go to the dentist than deal with insurance, but that isn’t an option. Fortunately, companies like CoverWallet are now making it easier than ever to deal with insurance online.

The most common risks

Evaluating the various policies that might be relevant for a business can be challenging, and the most important aspect is to understand the risks. Does the business work with expensive materials that could be damaged while they’re in transit? Is there a chance a client isn’t happy with the work? Is there a risk of injury at a project? Are there company vehicles? Could contracts potentially contain an error? Are there any employees other than the owner? Could a project be delayed?

Every question has a yes or no answer, and they are easy to answer. But the reality is the responses also say a lot about the type of work a business does and the amount of risk they are exposed to. In all of these cases, insurance can help mitigate any sort of long-term financial damage that could arise as the result of an accident or claim.

Understanding insurance policies

The most standard insurance for engineers ( includes both General Liability and Professional Liability.

The cost of a Professional Liability policy varies, but it can cover everything from accidental errors in a document or contract to a lawsuit that stems from an unhappy client who believes they were given the wrong information or advice.

General Liability, on the other hand, covers third-party claims against a business. For example, if a client or a building inspector trips and falls at a jobsite, this policy would cover the cost of a lawsuit, the medical treatment, and other expenses related to the incident.

However, there are many other policies that could make sense for a business, depending on the nature of its work:

  • Cyber Liability — In the event that someone steals customer data in a breach, this policy has you covered.
  • Commercial Property — If a business owns or leases an office, there is a risk of storms, fires, or theft, and it is worth having coverage in place to protect against potential losses.
  • Workers Compensation — In most states, Workers Compensation is mandatory. It covers medical costs associated with a work-related accident and any forgone employee wages.
  • Inland Marine — This policy covers materials in transit by land. If a business works with expensive materials, this coverage would cover the cost of them if they were damaged en route to a jobsite.
  • Umbrella — If a claim exceeds the limits of one of the other policies, Umbrella insurance can make up the difference. For example, if there is a policy limit of $500,000, but the assessed damage goes above that, Umbrella insurance would help bridge the gap to cover a business.

Understanding the various policy types can be complex, and it is essential for engineers to find an insurance adviser it trusts. These advisers can play a helpful role in understanding the types of policies, knowing exactly what they cover, and providing information about the different limits and the fine print. Insurance for an engineering business is hardly optional with the potential risks it faces, and it is imperative to have the right coverage in place to be prepared for any incident.

Jim Loughlin is an insurance industry veteran with more than 20 years of experience. He is currently the senior sales director at CoverWallet, a tech company that enables businesses to understand, buy, and manage insurance online, including insurance for engineers.