In the 21st century, the construction industry will increasingly shift from the traditional design-bid-build delivery of projects, in which separate entities are hired for the design and construction phase, to design-build, in which a single entity is responsible for both aspects of the project. While this new delivery system may save the owner on overall project costs, it presents new risks for the contractor-engineer firm since they now are subject to a higher standard of care than they were previously. This means that their exposure to lawsuits is greater and thus, there is a need for new specialized engineers liability insurance products to cover them against such risks.

This is a continuation of the trends seen in the 1990s, wherein many specialty coverage products emerged such as pollution professional liability policies as an increasing number of suits were filed against engineers due to their perceived roles in creating environmental hazards and pollution, and breach of intellectual property rights coverage, in case engineers inadvertently violated another party’s IPR in the course of performing their jobs.

Since engineering firms are no longer just responsible for the design phase but also responsible for project implementation as well, engineers liability insurance policies must include coverage for risks they did not previously face, such as quality control and construction inspection; supervisory problems; site health and safety issues and scheduling and coordination of construction. Engineering firms must also take out general liability insurance to protect themselves in case an injured worker or third party makes a claim against them for bodily injury or property damage while on the construction site. Fortunately, insurance carriers are proving responsive to the need for new specialized products, although coverage varies from one company to the next. For example, some carriers may provide coverage only for projects implemented under a design/build contract while others may extend coverage for real as well as contingent liability exposure. However, exclusions provisions in general liability policies may result in some coverage gaps requiring the firm to clarify these with their provider.

To ensure that they get the coverage that they need, engineering firms also need to implement risk management strategies to address these new risks, in which professional liability coverage is a part.