There is no single Professional Indemnity limit that is appropriate for every engineer.
The limit should be considered against:
- contractual requirements
- statutory or registration requirements
- maximum project values
- the type of engineering work
- the potential cost of rectification
- the size and complexity of projects
- whether defence costs are inside or outside the limit
- whether the policy limit applies any one claim or in the aggregate
- principal, client or tender requirements
A contract requiring a particular PI limit does not automatically mean that limit is adequate for the engineering business as a whole.
Likewise, a high project value does not by itself determine the correct PI limit.
The engineer should consider both the likely severity of a claim and how the policy limit actually operates. The amount available can be affected by defence costs, multiple claims and aggregate limits.
The final limit is therefore a risk and contractual decision rather than a simple percentage of turnover or project value.
Engineers Australia’s Professional Indemnity Insurance checklist provides a useful additional framework for reviewing an engineering firm’s risk profile and insurance arrangements.
Need help with choosing an appropriate Professional Indemnity limit? #
See our Professional Indemnity Insurance for Engineers page, review the engineering insurance FAQs, or request a written quote.
