Do structural engineers carry insurance for catastrophic errors?

Question

A friend of mine is a structural engineer and he often complains to me about how little sleep he gets at night worrying over whether or not he accounted for all the little details involved in his design.

For all the double and triple checking one might do, buildings are very complicated structures. Sometimes its impossible to account for every possible situation. Of course, one does to the best of their ability to try to account for everything. But if something goes wrong, say a building either collapses or some other less severe problem causes injury or death, I would assume that the engineers can be held accountable.

Are they covered by some sort of malpractice insurance in a similar fashion to doctors?

Answer 1

You might be interested in the National Society of Professional Engineers' page of professional liability resources, which has a section for insurance. There are quite a few entities offering professional liability insurance for engineers; NSPE surveyed 18 of them last year with questions like:

Question #6: What percentage of your total book of [Architecture/Engineering] premium comes from firms with a revenue of:

• Less than \$500,000
• \$500,000 to \$5,000,000
• More than \$5,000,000

Professional liability insurance is a very important part of running a business, and engineering firms are no exception. Independent engineering contractors may also carry insurance. However, even in jurisdictions that require professional liability insurance in certain fields, there may be lesser-known alternatives or loopholes that allow the requirements to be circumvented. For example, the state of Florida does not require all practicing physicians to carry medical malpractice insurance:

As an alternative to having an actual malpractice insurance policy, Florida law also allows doctors to use other types of pre-arranged secured assets to cover claims in these amounts, like trust accounts, bank letters of credit, and similar arrangements. There is nothing inherently wrong with these other types of security, but they are rarely used.

...the law also has a loophole that allows doctors to carry no insurance at all. If your doctor practices without insurance he should have a sign posted on the wall of his office advising his patients of that fact.

So when you ask if engineers are insured "in a similar fashion to doctors," you need to understand that even for doctors, the situation varies from jurisdiction to jurisdiction. I'm not aware of any US state that requires individual engineers or engineering firms to carry professional liability insurance; that said, I studied in California and I've never worked for a firm practicing in another state, so such laws may very well exist. To quote NSPE again:

Many firms carry and maintain professional liability insurance policies and/or use specific methods to transfer or mitigate professional liability risk exposure.

NSPE encourages individual employed engineers and their companies to work in harmony to minimize professional liability risk exposure consistent with good professional practice and sound business judgment.

... While insurance coverage is not the only way to protect the firm and employees, it is NSPE's position that companies that do not carry professional liability insurance should disclose that fact in writing to their employed engineers.

For a more in-depth treatment of the subject, I recommend auditing or enrolling in an online course, such as Concepts of Engineering Practice from MIT OpenCourseWare.

Answer 2

Air's answer is pretty thorough already, and the liability issue is truly complex. In my liability training at work, we've been told of situations where engineers from every firm with any association to the machinery or structure in question are named in suits, not necessarily because they're all at fault, but (1) so that their fault can be determined by a judge and (2) because in a civil case, settling may be cheaper than paying for a lawyer to try and get the company/engineers dismissed from the suit.

What I want to do is point out a good example of a catastrophic failure, the level of research that can go into finding out what happened, and the consequences for the firms and engineers involved. One of my professors favorite case studies was the Kansas City Hyatt Regency walkway collapse.

In short, two walkways, at the fourth and second floor levels and directly above/below one another, collapsed during an event the hotel hosted, killing 114 people and injuring. It was the largest loss of life in a structural collapse in the US from the time that it happened in 1981 until the World Trade Center collapsed on Sept 11th.

There was a large investigation by the National Bureau of Standards, a link to which can be found here. That PDF is 370 pages long, including 95 pages of appendices.

As a result of the investigation, the engineering firm and the engineers who signed off on the final drawings lost their licenses to practice, though it appears they avoided any criminal charges and that most of the civil damages were paid by the owners of the hotel.

Obviously, all cases are different, so while they criminal charges were dismissed here, it's possible they wouldn't be in another case. I think the important thing to take away here is that a lot of the work engineers do can be dangerous if not done properly, and being involved on a project that ultimately injures someway means you are extremely likely to have to answer for your design choices at some point, even if they are sound and you have done nothing wrong.