Professional Liability for Design and Consulting Firms
Professional liability, also called E&O, is built for one kind of claim: that your design, advice or report caused a client a financial loss. For an architecture, engineering or consulting firm, it is the policy that matters most.
Two firms with the same revenue can buy very different protection. The difference is in how the policy defines your services, how it handles defense costs, and whether your retro date protects your past work.
Your Old Projects Depend on Your Retro Date.
See on one timeline how claims-made coverage works, what happens when you switch carriers or close the firm, and check your own retro date.
What Professional Liability Is Built For
Errors in drawings and specs
A missed dimension, a wrong detail or a conflict between disciplines that costs the owner money to fix.
Advice clients relied on
A recommendation, report or opinion that turned out wrong and led to a loss.
Delay and extra cost
Redesign, change orders and schedule impact traced back to your documents.
Defense, even when you did nothing wrong
Most claims against design firms end without a payment. Defense costs are often the biggest expense.
The Retaining Wall Detail.
An engineering firm details a site retaining wall. Two years after completion the wall tilts, and the owner claims $180,000 to rebuild it plus legal fees. The firm’s position is that the contractor changed the drainage.
The policy pays to defend the firm while the facts are sorted out. Whether defense costs reduce the limit, what the deductible applies to, and whether the retro date reaches the project year all decide how much the firm pays itself.
Hypothetical example for illustration. Coverage for any claim depends on the policy terms and the facts.
Contract Language to Watch.
One large claim can use up an aggregate that also protects every other project. Limits should match your largest contracts, not only the average one.
Claims-made coverage only works if you renew without a gap. Plan for a tail if you close or retire.
Professional liability almost never allows additional insureds. This wording usually needs to change before you sign.
Professional Liability: Common Questions
What is the difference between professional liability and general liability?
General liability is for injury and property damage, like a visitor tripping in your office. Professional liability is for financial loss caused by your design or advice. Most design firms need both.
Does professional liability cover defense costs?
Yes, and for many firms that is its main value. Some policies pay defense outside the limit, some inside it, and some pay the first dollars of defense before your deductible applies. We compare those terms side by side.
How much professional liability does my firm need?
Start with what your contracts ask for, often $1M or $2M, then look at your largest project and your residential or public work. We walk through it with your contracts in hand.
What happens to my coverage if I switch insurance companies?
Your retro date should move with you so past projects stay protected. See our claims-made timeline to check your own situation.
Tell Us About Your Firm. We’ll Tell You What We See.
Starting out or renewing, with a policy in hand or not. If something is worth discussing, we’ll call. If not, we’ll say so.