Professional Liability Claim Examples in the Engineering World

Dec 15, 2023Professional Liability

The intricate engineering world, where designs and structures shape our daily lives, is not free from potential pitfalls. Errors, while often unintended, can result in significant liabilities. Engineering Liability Claims offer insights into professionals’ real-world challenges, and studying these cases can be instructive.

Let’s delve into some claim scenarios, understand the issues, and extract lessons for future caution.

1. The Collapsing Bridge

Scenario: An engineering firm was contracted to design a pedestrian bridge. A few months post-completion, the bridge collapsed, fortunately without any casualties.

Claim: The local municipality sued the firm for design negligence, resulting in reconstruction costs and damage to public property.

Lesson: Rigorous quality checks and regular maintenance schedules are essential. Periodic stress tests could have detected issues before the collapse.

2. Faulty HVAC System in a Commercial Building

Scenario: A commercial complex experienced frequent HVAC system breakdowns, leading to tenant complaints and business interruptions.

Claim: The building owner filed a claim against the engineering firm responsible for the system’s design, citing losses due to rental refunds and repair costs.

Lesson: Continual communication with clients post-project completion helps in the early detection of issues. Regular feedback loops can mitigate such challenges.

3. Software Failure in Traffic Management

Scenario: An engineering firm specializing in software developed a traffic management system for a city. However, due to a software glitch, traffic lights malfunctioned, causing chaos and minor accidents.

Claim: The city council claimed damages against the engineering firm for the software malfunction that led to public inconvenience and repair costs.

Lesson: Thorough software testing, especially those that can impact public safety, is vital. Beta testing in controlled environments before full-scale implementation can identify potential glitches.

4. Flawed Water Drainage Design

Scenario: A residential community experienced severe flooding due to an inadequate drainage system, causing property damage to homeowners.

Claim: The residents’ association filed a claim against the engineering firm responsible for the drainage design, seeking compensation for property damages.

Lesson: Considering worst-case scenarios and planning for extreme conditions can help design robust systems. Historical data and predictive modeling can assist in this endeavor.

5. Structural Failure in a High-rise

Scenario: A high-rise building showed signs of structural stress, such as cracked walls and uneven floors, within a year of completion.

Claim: The building association claimed damages against the engineering firm responsible for the structural design, citing the need for extensive repairs and potential risks to residents.

Lesson: Constant upskilling and staying updated with the latest material science and construction techniques is crucial. External audits and third-party reviews can offer additional assurance.

6. Electrical Malfunction in a Hospital

Scenario: A newly designed hospital wing experienced electrical outages, jeopardizing patient care and medical equipment functionality.

Claim: The hospital administration filed a claim against the engineering firm responsible for the electrical system design, attributing losses to patient care disruptions and equipment damage.

Lesson: For critical infrastructures like hospitals, redundancy is key. Having backup systems and fail-safes in design can prevent such critical failures.

Lessons Learned: The Way Forward

While these real-world cases from the Engineering World offer glimpses into potential pitfalls, they also illuminate the path forward:

  • Continuous Learning: Engineering is a constantly evolving field. Staying updated with the latest techniques, materials, and technologies is essential.
  • Client Feedback: Maintaining open communication channels with clients post-project can help in early detection and rectification of issues.
  • Third-party Audits: Engaging external experts for periodic audits can provide an unbiased view of potential vulnerabilities.
  • Ethical Practices: Above all, prioritizing safety and well-being over cost savings or shortcuts ensures that engineering solutions stand the test of time.

In conclusion, while Engineering Liability Claims can be daunting, they also offer valuable lessons. By studying these cases, engineering firms can adopt best practices, ensure the highest standards, and ultimately mitigate the risks of future claims. Learn more about our professional liability insurance services for engineering firms to get the help you need in resolving any issues your firm faces.

Are your firm's Cyber risks actually covered? If you're like most design professionals, the answer might surprise you.

According to the World Econo

Does your E&O policy cover cyber attacks?

For most design professionals, the answer is no.

The most common coverage in Professional Liability policies regarding any type of virus transmission is called "network security" liability. But this is only for "3rd party" expenses, such as when a design firm gets sued by one of their clients for the transmission of a virus. It covers the cost of defense and any "3rd party" costs that the client incurs. However, it does not provide any "1st party" coverage for the design firm itself in the event of a cyber attack or breach. Also, these endorsements typically offer sublimits that cap payouts at a fraction of actual incident costs.

Only true Cyber Liability covers 1st party costs associated with a cyber attack or breach on the design firm. That is why the coverage within a Professional Liability is called "network security" and not "cyber liability".

What about a major ransom demand? What about two weeks of system downtime? What about paying a fake invoice for $85,000?

That's a different category of loss entirely. The vast majority of design firms enter 2026 without true cyber coverage.

The FTC's cyber insurance guidance recommends standalone cyber coverage for businesses.

Why are engineering firms prime targets?

Fifty-nine percent of AEC firms experienced a cybersecurity threat in the past two years, according to Dodge Data & Analytics. Cyberattacks on construction companies doubled in Q1 2024 compared to Q1 2023.

The reasons are structural. Engineering firms hold exactly what attackers want:

  • Time-sensitive projects where delays cost real money
  • Critical infrastructure plans of interest to nation-state actors
  • Detailed client information across multiple projects
  • Smaller IT budgets than the data they protect would suggest

Design professionals are more than twice as likely to face ransomware attacks compared to other industries, according to research from CyberPress and FalconFeeds.

DragonForce, a ransomware group that attacked O&S Engineers & Architects in February 2025, specifically targets architecture and engineering firms. They kn

Frequently Asked Questions

Does my professional liability policy cover cyber attacks?
Just 3rd party claims, if at all. Typical coverage within an E&O policy that is associated with cyber threats are usually called "Network & Security" Liability endorsements and these only cover 3rd party claims. These are claims from your clients alleging you (the design firm) spread a virus to them and would cover the costs to restore your client. There is usually no coverage for the design firm itself for a cyber breach it experiences and the internal expenses associated with it. That's why a standalone Cyber Liability policy is needed to cover these 1st Party expenses. Review your policy language carefully.
Is the cyber add-on to my E&O policy enough protection?
Usually not. Cyber endorsements tend to offer lower limits, narrower coverage, and more exclusions. And they usually only cover the expenses to restore a client or other 3rd party. Not the Design Firm itself.
Why are engineering firms prime targets for ransomware?
Three reasons: deadline pressure, valuable data, and inadequate defenses. Attackers know engineering firms can't afford extended downtime. That pressure makes engineering firms more likely to pay ransoms quickly.
What happens if client data or CAD files are breached?
You face immediate costs for forensic investigation, legal counsel, and notification. Longer term, you may face lawsuits, regulatory penalties, and reputational damage. Cyber insurance covers these costs. Your E&O likely won't.
How much does cyber insurance cost for design firms?
Premiums vary based on firm size, revenue, and security measures. Many design firms find coverage more affordable than expected, especially compared to the potential cost of an uninsured breach. For firms with Revenues of $1M to $5M the annual premiums can range from $1,000 to $3,000 depending on the limits and coverages selected.

What should design professionals do now?

Effective risk management services start with understanding your actual exposure.

Don't assume your current coverage is adequate. Pull your policy. Read the cyber-related language. Look for exclusions, sublimits, and gaps.

Then ask yourself:

  • What would two weeks of downtime cost in lost revenue?
  • What would you do if you paid out $50,000 to a fake invoice?
  • What would you do if you could no longer access your design plans and email account?

If those questions concern you, it's time for a real conversation about standalone cyber coverage.

At Risk Specialty Group, we're not just another insurance provider. We're your guide in navigating the complex world of cyber risk for design professionals.

We work with over 20 "A" rated carriers who specialize in architects, engineers, and design firms. We know what questions to ask because we've seen what happens when firms don't have the right coverage.

Ready to understand where you stand?
Just a Quote — For those who know what coverage they need
Conversation & Quote — For those unsure about cyber coverage gaps
Full 360° Review — Comprehensive risk analysis including emerging cyber exposures

Contact Risk Specialty Group: 713-552-1900 | info@riskspecialtygroup.com

About the Author

Travis Landers, ARM, is the President and Founder of Risk Specialty Group, a Houston-based insurance and risk management firm serving design professionals. A UT Austin McCombs School of Business graduate with over 25 years of entrepreneurial experience, Travis founded RSG in 2010 to help architects, engineers, and consultants navigate the complex world of insurance and risk management. Under his leadership, RSG has earned the IIABA Best Practices Agency designation multiple years running. Risk Specialty Group serves design professionals across Texas, Arizona, Arkansas, California, New Mexico, and Oklahoma.