High-enough professional liability (Errors & Omissions) limits for architects and engineers typically range from $1 million to $5 million+ per claim/aggregate, depending on project size and risk, with $2M–$5M becoming standard for many. Small firms may start at $1M, while larger firms or those on major projects ($4M+ construction cost) often require $5M or more, sometimes utilizing layered policies.
Key Considerations for Determining Limits:
- Project Size and Scope: Larger, more complex projects (e.g., infrastructure, high-rises) necessitate higher limits. A common benchmark is matching the limits to the construction value or potential damages.
- Contractual Requirements: Clients often dictate minimum limits, such as $1 million, $2 million, or $5 million.
- Firm Size and Revenue: Higher annual billings generally correspond to higher risks and the need for higher limits.
- Claim Severity Trends: Insurance surveys indicate that $1 million is often no longer sufficient, with many firms moving to $5 million or higher due to increased claims severity.
- Risk Profile: Specialized or higher-risk work (e.g., structural, geotechnical) requires higher, more robust coverage.
Commonly Recommended Approaches:
- $1M/$2M: Considered standard for small to medium-sized firms with lower-risk projects.
- $2M–$5M+: Increasingly requested for larger projects or by clients seeking greater protection.
- Project Specific Policy: For very large projects, obtaining a separate, project-specific policy can provide dedicated limits without exhausting the firm’s main policy. Project policies will commonly cover the whole design team.
- Excess Liability: Consider excess policies that can provide higher limits over your practice policy for coverage for catastrophic claims.
It is important to review limits annually to align with firm growth and consult with an insurance broker to ensure adequate protection.
Also review the article from A/E Pronet for further details limits of liability. https://aepronet.org/liability-limits-adequate/
If your firm has any questions about limits of liability on professional liability please call, or email, your Professional Underwriter agent for assistance.