Oil & Gas Insurance- Answer to a Common Question
Question: I am a full time consultant for an Energy Company. I do Engineering work for them, and my contract requires me to carry Professional Liability Insurance. They have final approval and stamp all my drawings, so why must I purchase coverage?
Answer: Good question, and one we come across often. Professional Liability coverage protects you from liability risks due to negligent acts, errors, or omissions while performing your professional services.
Any individual or company who provides professional services would be smart to carry professional liability insurance. The main exposure you face is actually professional liability in nature. The General Liability policy only insures against 3rd party bodily injury or property damage, but it typically excludes any claim that involves your professional work. An example of General Liability would be if you fell on the work site, causing a ladder to slip, which injured a project owner’s employee. An example of Professional Liability would be an error in design documents that caused a loss. The loss could be physical in nature (such as property damage), or it could be consequential in nature (such as loss of income as a result of the error in design).
Even if the project owner ultimately approves & stamps your designs and drawings, you still may have influence on the final design decisions. If an incident occurs, having influence is plenty enough to get you involved in a lengthy legal battle over ultimate responsibility.
One of the most appealing reasons to purchase the coverage is that it typically means bigger business opportunities for you. Most major companies require a contractual indemnification along with professional liability insurance as a minimum requirement to do business. When the potential income is realized, purchasing the coverage is only a small, up front investment comparatively. If your company ever gets itself into a professional liability claim, you’ll be glad you’ve got protection.
If you’re interested in a professional liability claim, or you have further questions, please contact us!