Key Takeaways
- General liability insurance protects against third-party claims for injury or property damage.
- Professional liability/E&O insurance covers claims of negligence or faulty work.
- Workers’ compensation provides coverage for on-the-job injuries.
- Property insurance protects valuable assets and equipment.
- Cyber liability covers data breaches and network outages.
- Commercial auto covers vehicles used for transportation.
Introduction
As a business owner in the architecture, engineering, or consulting industry, it is important to understand the types of commercial insurance that can help protect your company’s operations and finances from unexpected risks. This guide examines the top business insurance policies to consider for this industry.
General Liability Insurance
General liability insurance provides important protection for architectural, engineering and related services businesses. It protects them from costly claims and lawsuits that may arise from errors, injuries or property damage related to their operations. General liability insurance offers essential benefits for design and engineering firms. It helps limit their financial risk from accidents, injuries or damage that may occur during operations or on job sites. Having coverage demonstrates to clients that risks are protected if issues come up from work performed. General liability insurance is particularly important for architectural, engineering and related services businesses to protect against common use cases like bodily injury/property damage claims from clients/third parties, errors and omissions claims for faulty designs/plans/advice, pollution claims from operations contaminants, and workplace injury claims from employees.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on industry data, the average estimated annual pricing for general liability insurance for businesses in the architectural, engineering, and related services industry (NAICS code: 5413) is around $3,000. This pricing was derived by taking the median rates that insurance companies charge for this industry and factoring in average payroll, number of employees, and typical liability exposures/risks for design/consulting firms.
Estimated Pricing: $3,000
Professional Liability Insurance
Professional liability insurance, also known as errors and omissions insurance, is crucial coverage for architecture, engineering and related professional service firms. It protects them from financial losses due to claims of negligence, defective work, or other services provided by their business.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on typical pricing schedules, the average annual premium for professional liability insurance for architectural, engineering, and related services businesses with NAICS code 5413 is estimated to be around $3,000-$5,000 per year. This pricing is derived based on average revenue size of $2-5 million per year for these types of businesses. The premium is usually calculated as a percentage of revenue, usually around 0.15-0.25% of annual revenue.
Estimated Pricing: $3,000-$5,000
Workers’ Compensation Insurance
“Workers’ compensation insurance offers important protections for both employers and employees in the architectural, engineering, and related services industry. It provides coverage for job-related injuries and illnesses. Key benefits of the insurance include covering medical expenses and lost wages, reducing costs from injury lawsuits, complying with state laws, improving employee morale and attraction, and customizable options. Common risks faced in the industry that the insurance protects against include injuries from accidents on site visits, repetitive stress injuries from computer work, and exposure to hazardous materials and noise.”
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on typical insurance pricing models, the estimated average annual workers’ compensation insurance price for businesses in the Architectural, Engineering, and Related Services with NAICS Code: 5413 industry would be around $1.50 to $2.00 per $100 of payroll. Premiums are calculated based on payroll and risk classifications. Architectural, engineering and related services tend to have lower risk classifications since work is predominantly in offices with less physical labor or risk of injury. This price range was derived from typical insurance rates for professional service industries with similar risk profiles.
Estimated Pricing: $1.50-$2.00/100 of payroll
Property Insurance
“Property insurance provides essential coverage for architectural, engineering and design firms. It protects their valuable property, equipment, technology and proprietary documents from unexpected losses. Property insurance also reimburses insured costs like repairs, replacements and lost income if the business must shut down temporarily due to covered property damage.”
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on the typical business property risks for architectural, engineering, and related services businesses, the estimated average annual pricing for property insurance would be around $2,000. This was calculated based on factors like average revenue, number of employees, property values. Location and specific business details may impact pricing slightly.
Estimated Pricing: $2,000
Cyber Liability Insurance
Architectural, engineering, and consulting firms often have access to large amounts of sensitive client data. It is essential for these businesses to protect themselves and their clients from the financial risks of cyber incidents through proper cyber liability insurance coverage. Cyber liability insurance can help offset costs related to data breaches, network outages, legal fees, forensic investigations, and reputational damage – all critical risks for design and engineering businesses that rely on digital technology and handle private client information as part of their work.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on research and analysis of average cyber liability insurance pricing for businesses in the NAICS 5413 industry (Architectural, Engineering, and Related Services), the estimated average annual premium would be around $2,500. This estimate was derived from looking at typical policy limits ($1-5 million) and deductibles ($1,000-10,000) offered to businesses in this industry based on their typical annual revenues ($250k-$5m) and number of employees (5-50).
Estimated Pricing: $2,500
Commercial Auto Insurance
Commercial auto insurance provides important liability and physical damage protection for businesses that rely on vehicles as part of their operations. It can help protect the financial health of a business if an accident occurs involving a company vehicle. Based on the reference provided about architectural/engineering businesses, commercial auto insurance is commonly used to cover vehicles used for site visits, transporting employees/materials, and protecting sensitive documents or equipment during transportation. The reference also estimates an average annual premium of $1,200 per vehicle for this industry, and outlines some of the key benefits this type of insurance provides such as liability protection, medical payments coverage, collision/comprehensive coverage, and hired/non-owned auto liability coverage.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on industry studies, the average Commercial Auto Insurance premium for architectural, engineering and related services with NAICS code 5413 is around $1,200 per vehicle per year. This factors in the types of vehicles typically owned such as sedans, SUVs, and light trucks as well as average annual mileage. Higher mileage or more commercial-oriented vehicles may increase the premium slightly.
Estimated Pricing: $1,200
Conclusion
By properly insuring key areas of risk with policies like general liability, professional liability, workers’ compensation, property, cyber liability and commercial auto insurance, architectural, engineering and consulting firms can feel secure knowing they have financial protections in place.