Best Insurance for Architects

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Contributor, Benzinga
September 8, 2020

Insurance is an important precaution for your trade as an architect. Your work lets you create amazing things, and attention to detail is a crucial requirement. There's always the possibility of a mistake or misunderstanding, and whether you're at fault or not, it can be costly to make things right.

Comprehensive business insurance for architects can protect you when a client is injured at your office or a miscalculation on a structural plan results in a claim of negligence. It’s important to consider the types of insurance you need for your architectural business, the cost of insuring your business and your insurance provider options.

Best Architect Insurance

Although architect insurance isn't required to become a licensed professional, there are times you need to invest in extra protection. Compared to other professions, architecture has a higher risk of professional claims due to the amount of precision involved in designing structures.

The top providers in the table below can cater to your insurance needs. Complete a simple form to receive an estimate in minutes.

Types of Architect Insurance

Architect insurance is a group of policies designed to protect against the risks of the industry. Here are the main types of policies worth consideration:

Business Owner's Policy (BOP)

Most architects use a business owner's policy (BOP) as the foundation for risk management plan. It may combine 2 or 3 coverages that are essential for your business. Having a single, convenient policy bundling 3 coverages will help you save money while offering additional protection.

Coverages bundled in a BOP include:

  • General liability insurance to help protect your business from 3rd party claims of alleged property damage or bodily injury caused by your firm. If a client is injured at your premises, general liability will help pay for their medical expenses. This coverage can also protect you from claims of alleged property damage to other people's items.

General liability insurance may also protect you from claims of personal injury, including libel and slander.

  • Commercial property insurance helps protect the physical space where you conduct business. It also helps protect the equipment you use in your business, including design equipment, measuring tools, drafting equipment or office furniture. Commercial property insurance applies whether you lease or own the business property.
  • Business income insurance helps cover any lost income if your business can't carry on with its operations due to covered property damage or losses.

Professional Liability Insurance

Mistakes can happen even when you're an expert in your trade. You could be sued if a customer or client thinks that a mistake in your professional services brought about financial losses. Professional liability insurance or errors and omissions insurance covers you and your business if you make a mistake in your services.

Professional liability insurance protects against claims of misrepresentation, negligence and inaccurate advice. Some allegations your architect business could face include:

  • Failure to provide contracted services accordingly, like budget overruns or missed deadlines
  • Errors or omissions like a mistake in design calculations

A client could still sue you even when you believe you weren't at fault. With this coverage, you won't have to pay hefty legal defense costs out-of-pocket.

Directors and Officers Insurance

You're exposed to risks of legal action against you if you're a director or officer at an architectural practice. Directors and officers insurance protects the liability and personal assets of a director, officer or senior personnel against claims of bad decisions or wrongful acts made in their capacity.

You may face legal actions on matters like environmental liability, insolvency-related proceedings and accounting irregularities.

Cyber Insurance

Your plans and drawings are among your greatest assets – you may choose to store them on hardware located offsite or in the cloud. This leaves them exposed to the threat of equipment failure or cyber-attacks that can potentially cripple your business. Cyber insurance covers 1st and 3rd party data breaches. Depending on your business, cyber insurance may cover costs like:

  • Reputation management
  • Response costs
  • Administrative obligations
  • Investigation costs
  • Legal fees

Workers' Compensation Insurance

Architecture firms with employees must carry workers' compensation insurance to cover claims by employees who are injured or fall sick in their line of work. This coverage will pay the medical fees and lost wages for workers who are rendered unproductive because of a workplace injury. 

Workers' comp insurance can also help pay for ongoing medical costs, including physical rehabilitation and medication.

Commercial Auto Insurance

Commercial auto covers accidents involving vehicles owned or used by your firm. 3rd party liability coverage for property damage and injuries is mandated in most states, but a policy could also include 1st party coverage like collision and medical payments. 

The limit of your commercial auto insurance policy is typically higher than personal auto since businesses often have more claims against them.

Accounts Receivable Insurance

Your architectural design projects may span months or years. This means that receivables will make up a huge percentage of your company's total assets. Accounts receivable coverage can pay the cost of replacing your business records if they are damaged. It may also cover the expenses you incur trying to recover money owed to you.

Cost of Architect Insurance

Architect insurance costs vary widely depending on multiple factors, including the policies you choose and your firm's risks. Policies for a home-based architectural business may cost less than policies for a large company. Here are other factors that insurers consider when calculating your insurance premiums.

  • Your revenue. Insurance companies assume that you stand to lose more if your business generates higher revenue. You can expect to pay a higher premium if your firm records a higher annual revenue, depending on your insurer's assessment of other businesses in your industry.
  • Coverage limits. A higher coverage limit will translate into a higher premium. However, you will have lower out-of-pocket costs if a claim is made against your business.
  • Deductible. A higher deductible means lower premiums since there's a lesser financial burden to your carrier if you file a claim. Remember, a higher deductible increases your financial burden, so pick an amount you can afford.
  • Business location. Insurers will consider your firm's geographical position when calculating your premium. You can expect to pay more for insurance if your business is located in a flood or earthquake-prone region.
  • Claims history. Insurance companies often offer lower premiums for companies with few or no claims.
  • Coverage types. Architectural business owners must choose from a list of business insurance policies, and each policy you add increases the overall cost of business insurance.
  • Contracts. Your business contracts can either lower or increase your exposure to liability. You will pay a higher premium if your risk of exposure is higher.

Here’s a cost breakdown of how much you can expect to pay for different types of policies based on the Insureon online calculator.

Type of insuranceCoverage limit per occurrenceDeductibleAnnual premium
General liability insurance$1 million$500$425
Business owner’s policy$1 milion$500$790
Workers’ compensation insurance$1 million$500$600

How Architect Insurance Works

When you purchase architect insurance, you're obtaining multiple policies that insure against risks specific to your industry. The most common risk for architects is accusation of negligence in design that causes a building to collapse.

Architectural firms also own business property that can be destroyed or damaged by vandalism or fire. Commercial property insurance can protect against such risks. You'll also need commercial auto to insure your business-owned vehicles, workers' compensation insurance to protect your business from employee claims and general liability to cover the costs associated with 3rd party claims.

While you don't need architect insurance to obtain your practitioner's license, the right insurance may help you land new clients, lease commercial property or partner with other firms. Bundling policies is often cheaper than buying individual policies.

Try Simply Business

Simply Business offers a comprehensive suite of business insurance that specializes in making it easy to insure your business. 

Whether you’re looking for construction workers' insurance or insurance for your startup, Simply Business helps you find the right coverage at the right price. This includes your architecture firm.

Tell Simply Business a little bit about your business and you'll get almost-instantaneous affordable quotes from top insurance providers. You can look into workers’ comp insurance, business owner’s plans, liability insurance, commercial auto and more that will cover everyone on your team, and you can get covered in accordance with state law or the requirements of every new client without overspending. 

Building your business is hard enough. Let Simply Business make it easier. Get a quote from Simply Business today.

Protect Your Architectural Business

From cyberattacks to claims of negligence, the potential pitfalls of your architecture firm are almost impossible to predict, and insurance can help mitigate your operational risks.

Our recommended carriers can advise on the types of coverage suitable for your business and how you can lower your business insurance costs. Start with your free quote to protect your architectural business.