Different industries come with various inherent risks. Businesses in engineering and architecture are typically more dangerous for employees and third parties because of the equipment used and the types of projects being completed. You need to have the right insurance policies in place to ensure your business continues to operate no matter the circumstances. Before we get into the policies you need, let’s take a look at the market trends projected for 2022.
Despite inflation, an uneven economic recovery, and increasing settlement costs, the credit rating agency AM Best has revised its 2022 market segment for US commercial lines, including insurance trends, from “negative” to “stable.” While general liability and professional liability continue to have a negative outlook, workers’ compensation, surety, and commercial property are stable.
It is also likely that businesses looking to purchase insurance will see lower rates. The average commercial lines rate increases in Q1 of 2021 were down to 8.3% from 10%. As insurance companies continue to strategically compete with one another, rates should continue to go down, but experts expect that trend will flatten in 2022–particularly in the areas of property and injury insurance. It’s possible that even high-quality risks could see rate decreases later this year.
Insurance protects your business in the event of an accident or incident where someone is injured, or property is damaged. While there are numerous insurance policies to choose from, some are more common than others, and it is crucial to be aware of your options and obligations. The most common policy types for those in engineering and architecture include:
In the event a third party is injured on (or as a result of) your project site or business, they have the right to file an injury claim. The same goes if their property is damaged. If the insurance company determines your business is liable, your general liability insurance can kick in to manage those expenses.
For example, architecture firms often complete projects near the general public. Clients, suppliers, and partners may also visit worksites from time to time. Heavy machinery, employee errors, and defective tools are factors that can contribute to accidents. General liability insurance covers damages and associated legal costs if an incident occurs that results in physical injury, property damage, or another type of expense.
Professional liability insurance, also known as errors and omissions insurance (E&O insurance), protects businesses in the event of a liability lawsuit. Liability lawsuits are relatively common in industries like architecture, engineering, and construction. Delays, unexpected costs, and accidents contribute to third parties and clients filing claims. E&O coverage can ensure your business does not suffer unnecessarily because of a lawsuit.
Professional liability insurance also covers damages and injuries due to faulty design. However, that only applies to instances of professional negligence. E&O insurance does not cover the costs of criminal prosecution.
No matter the types of services your firm provides, you will need a physical office. It is there that you will likely keep possession of important documents, expensive equipment, and other valuable tools. To protect those assets, you need property insurance.
All of your company possessions have a value to them. Depending on the value, the loss of a single possession could spell disaster for your company. With property insurance, you will be covered in the event something inside your physical office is lost or damaged. Property insurance typically covers the property as well, like in the event of a fire, flood, or natural disaster.
Property insurance can also protect your business in the event of vandalism or robbery. With sufficient coverage, your firm will receive enough money to repair or replace damaged property, as well as cover lost income from any downtime.
As an architect or engineer, you will regularly travel to job sites. Depending on the size of your firm, you will likely have a company vehicle. To protect yourself and others in the event of an accident, you will need to purchase commercial vehicle insurance.
Commercial vehicle insurance covers some or all of the following depending on your policy:
It is important to note that you could have a personal auto policy that would protect you in the event of an accident, but having a commercial vehicle policy ensures your business is not jeopardized after a crash.
While state requirements vary, workers’ compensation is typically mandatory for businesses that have employees. For architecture and engineering firms, heavy machinery, powerful equipment, and hazardous environments or materials contribute to the inherent dangers for workers.
No matter the safety protocols you have in place, it is likely that at some point an employee will sustain an injury while on the job. While the damage could be minor, there is also the chance of an accident resulting in serious injury, disablement, or death.
If someone is injured while working, you are legally responsible for related medical costs and partial wage reimbursement. Workers’ compensation coverage ensures the money is there to manage those expenses. In the event an employee is disabled, your insurance company will also manage disability benefits.
While insurance is crucial for all businesses, it is only a piece of the compliance puzzle. At Harbor Compliance, we handle all aspects of compliance for architecture and engineering firms, as well as a full range of other businesses. If you are looking for help keeping your business compliant, we are here to help. Whether you are in the process of forming your business or you are expanding to new states, our compliance specialists can answer your questions. Contact us today to learn more.
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