Should I waive the consequential damages provision?
Q: Why should I ask my client to waive consequential damages, as suggested in some of the standard industry documents?
A: Deleting a provision that waives consequential or special damages increases your risk, perhaps substantially. The mutual waiver A201-1997 General Conditions of the Contract for Construction found in AIA documents, exists to help protect you against an imbalance between project risk and reward.
Q: What are “consequential damages?
According to AIA Contracts Documents, Consequential damages are “indirect expenses” or “expectation damages” connected to the alleged breach and can be significantly disproportionate to your fee or many times the cost of repairing the actual damage. Consequential damages can generally be awarded if they were reasonably foreseeable when the parties entered into the contract. That will be a question for the judge or jury to determine.
To learn about our Insurance Offerings and our Risk Management program, visit our website or Contact us today at 713-552-1900.
The Risk Specialty Group and RLI Design Professionals are pleased to feature our Contract Tip series. We’ll review a question submitted by a design firm relating to the subject of contracts. Keep in mind, though, that these discussions are general in nature and in making specific business decisions, it’s important to review your options with a knowledgeable attorney.
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?
Is the cyber add-on to my E&O policy enough protection?
Why are engineering firms prime targets for ransomware?
What happens if client data or CAD files are breached?
How much does cyber insurance cost for design firms?
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.
