There’s a lot to like about starting and running your own engineering business, including freedom and flexibility.
As your own boss, you have the freedom to set your own schedule, giving you control over your working hours…and your income. You can strategically book clients to increase your earnings, or prioritise downtime by accepting fewer jobs.
It’s not without its rewards, but it also comes with its own set of business risks. Things can and do go wrong, and your income and personal assets could be jeopardised without the right insurance cover. In a worst-case scenario, you could be forced to sell your home or other assets you’ve worked hard to accumulate over a lifetime.
If you’re an independent or self-employed engineer, you know you need professional indemnity cover, but did you know there are a range of other insurances that could provide additional protection if things go wrong?
While each engineering discipline has different risks and insurance requirements – and it’s important to speak with an insurance broker to tailor your insurance program to your field – there are some common insurance policies engineers typically take out, so let’s take a closer look at what they are.
Professional indemnity insurance
If a client believes they’ve suffered financial loss due to advice or services you’ve provided – or failed to provide – they may decide to seek compensation from you. Professional Indemnity (PI) insurance is there to help protect you if this occurs. It can cover the cost of your legal defence and any settlements you may have to pay to the other party, up to your policy limit.
“Regardless of the validity of the claim, if a client takes legal action against you it is time-consuming and stressful,” notes EngInsure Broking Operations Manager Maria Vidic. “It’s also expensive. PI cover serves as a safeguard for your assets and reputation, and provides peace of mind into your retirement.”
Maria Vidic, EngInsure Broking Operations Manager
Public and products liability insurance
Public and products liability insurance is also an essential cover for all businesses. As an engineer, you have a duty of care to uphold to your clients and your employees, as well as the general public. Legal costs and court ordered compensation payments to claimants can be substantial and potentially damaging to the financial position of your business if you are deemed negligent – even without intent.
“If you engage in face-to-face interactions with clients – whether it’s in your office, your client’s premises or in public spaces; or if you undertake physical works such as installation or supply products; having this coverage is crucial,” Vidic emphasises. “Public liability claims can drag on and incur significant expenses. For a sole trader, the financial burden of having to pay someone out could spell disaster.”
Maria Vidic, EngInsure Broking Operations Manager
Management liability insurance
Running an engineering business – big or small – carries substantial risk exposures and legal responsibilities. That’s why, in today’s litigious climate, management liability insurance can be indispensable. It’s important when it comes to defending, settling or paying compensation claims arising from errors or intentional actions by the company, its directors, officers, or employees – past or present. It’s tailored to shield you, your business, and your personal assets from substantial financial risks and legal costs should you encounter any of the following scenarios:
- Alleged wrongful acts by owners, directors or senior management
- Facing statutory fines and penalties
- Tax audit costs
- Dishonest acts by employees such as embezzlement of money or products
- Claims made by employees resulting from employment practices such as allegations of harassment, bullying or wrongful dismissal
Cyber insurance
Every business has a cyber exposure. Do you have a computer network, a website, or use email? Then your business could be significantly impacted by cybercrime; and a data breach not only affects your business, it can negatively impact your clients and customers. A network security breach can lead to:
- Financial losses
- Reputational damage
- Loss of intellectual property
- Disruption to business
- Statutory fines and penalties
It’s well worth checking in with an insurance broker to see if you’re covered, as many traditional business insurance policies do not include cyber liability insurance cover.
Securing the best cover for yourself
When you’re working for yourself, safeguarding your operations, income and assets is vital. And because there’s no one-size-fits-all solution, it pays to seek expert assistance to ensure you secure the right cover. A broker can help you to evaluate your requirements and source insurance policies that are the right fit for your risk profile.
To get started, reach out to one of EngInsure’s insurance specialists today.
EngInsure are here to support you with important insurance advice and solutions to reach the best possible outcome for your business. For assistance, please get in touch with one of our specialists:
T: 1300 854 251
E: info@enginsure.com.au
This article is not intended to be personal advice and you should not rely on it as a substitute for any form of personal advice. Please contact Whitbread Associates Pty Ltd | ABN 69 005 490 228 | License Number 229092 trading as EngInsure Insurance & Risk Services for further information or refer to our website.
