Size the limit to your largest engagement and your contracts, not to your revenue. Most engineering firms start at $1M per claim / $1M aggregate and move up when a client contract, an institutional buyer, or the size of a single engagement demands it. The second million of coverage usually costs far less than the first. Who this is for: Engineering firms choosing limits at purchase or renewal.
Same coverage, two names. Some carriers and contracts say professional liability and others say errors and omissions. They are the same policy. This page is written around professional liability. Here is the same guide written around errors and omissions.
The short version
- $1M per claim / $1M aggregate is the standard starting limit for engineering firms.
- Contracts, not statutes, are what push limits to $2M to $5M per claim, and public infrastructure work frequently demands $5M or a project policy.
- Doubling the limit typically adds 40 to 70 percent of premium, not 100 percent.
- Defense costs usually erode the limit, so the number on the page is not all available to settle.
- An excess layer is often cheaper than raising the primary policy for one demanding client.
Start with the three numbers that decide it
- The size of your largest engagement. If losing that engagement in a dispute would cost the client a million dollars, a $500K limit is decoration.
- What your contracts demand. For engineering firms, contract driven requirements start at $1M per claim / $1M aggregate and run to $2M to $5M per claim, and public infrastructure work frequently demands $5M or a project policy.
- Whether defense costs sit inside the limit. Defense costs usually erode the limit on professional liability. A $1M limit that spends $200K on defense leaves $800K to settle with.
What limits engineering firms actually buy
| Firm profile | Common limit | Typical annual premium |
|---|---|---|
| Solo or two person, small engagements | $500K to $1M per claim | $2,500 to $5,000 |
| Small firm, mixed client base | $1M per claim / $1M aggregate | $3,500 to $12,000 |
| Firm with enterprise or institutional clients | $2M per claim | $5,500 to $18,000 |
| Firm with contract mandated high limits | $2M to $5M per claim, and public infrastructure work frequently demands $5M or a project policy | $7,500 to $20,000 |
Note how the premium curve flattens. Going from $1M to $2M rarely doubles the price. It commonly adds 40 to 70 percent, and the second million is the cheapest million you will ever buy.
Per claim versus aggregate
Two numbers appear on your declarations page. Per claim is the most the policy pays for any one claim. Aggregate is the most it pays for all claims in the policy year. A $1M/$1M policy that pays a $1M claim in March has nothing left for a claim in October.
For engineering firms with more than a handful of active engagements, a separate and higher aggregate is worth asking about. It is usually a modest premium difference and it prevents a single bad year from wiping out your protection.
The deductible or retention
Professional liability policies carry a retention rather than a deductible on many forms, and it applies to defense costs from the first dollar. Common retentions for engineering firms run from $1,000 to $25,000. Raising the retention lowers premium, but only take that trade if you could genuinely write the check the day a claim arrives, because you will pay it before the insurer pays anything.
How Do I Get raise limits without overpaying?
- Ask for the $2M option quoted alongside the $1M. The spread is usually smaller than expected.
- Use an excess or umbrella layer for a contract that demands $2M to $5M per claim rather than moving the whole primary policy up.
- Check whether defense costs are inside or outside the limit, because outside is materially better coverage at a similar price with some carriers.
- Revisit limits any time your largest engagement doubles, not just at renewal.
Cost detail by coverage line is in the Morrow guide to professional liability cost.
What this looks like in practice
Illustrative example. Numbers are typical of claims we see and are not a promise of how any specific claim would be handled.
The setup: A engineering firm carrying $1M per claim / $1M aggregate when a single engagement produced a claim.
The claim: The matter started with a foundation design based on a soils report that under-reported groundwater. The contractor claimed $480,000 in dewatering and redesign.
The cost: $92,000 in defense costs and $340,000 in settlement, $432,000 in total, paid inside the policy limit after the retention.
The lesson: Defense and settlement together consumed a large share of a single million dollar limit. A second claim in the same policy year would have found very little aggregate left, which is the argument for a higher aggregate rather than a higher per claim limit alone.
Frequently asked questions
Q: How much professional liability coverage does a engineering firm need?
$1M per claim / $1M aggregate is the common baseline. Firms with enterprise clients, institutional work, or large single engagements move to $2M to $5M per claim, and public infrastructure work frequently demands $5M or a project policy, usually because a contract requires it.
Q: Is $1 million enough?
It depends on the size of your largest engagement and whether defense costs erode the limit. If a dispute on one project could cost a client more than a million dollars, it is not enough.
Q: Does doubling my limit double my premium?
No. Going from $1M to $2M commonly adds 40 to 70 percent, not 100 percent. The second million is usually the best value in the whole program.
Q: What is the difference between per claim and aggregate?
Per claim is the most the policy pays on any one claim. Aggregate is the most it pays for the whole policy year. A policy with the same number for both can be exhausted by a single claim.
Q: Do defense costs come out of my limit?
On most professional liability forms, yes. Defense erodes the limit, which is why a policy with defense outside the limit is worth asking about even at a slightly higher premium.
Q: What retention should I choose?
One you could write a check for today. Retentions for engineering firms commonly run from $1,000 to $25,000, and they typically apply to defense costs from the first dollar.
How Morrow helps engineering firms
Morrow is a licensed independent commercial insurance brokerage that specializes in engineering firms. Sizing limits against your contracts and your largest engagement is exactly the kind of question we answer every week, and because we place this coverage every day we know which carriers write it well, which forms are broad, and which contract language actually needs an endorsement behind it.
- We read the contract clause and tell you what your current policy already does and does not do.
- We market your account to carriers that have real appetite for engineering firms rather than whoever answers first.
- We issue certificates the same day a client asks, with the endorsements listed correctly.
- We stay on the file at renewal so limits, retroactive dates, and contract requirements do not quietly drift.
Get in touch and we will see how we can help. Tell us what you do, send over any contract that is driving the requirement, and send us the question and we will tell you where you stand. Start at morrowinsure.com or reach the team through the contact options on that page.
One more thing. This article is general information for engineering firms and is not legal advice, tax advice, or a statement of coverage. Policy wording controls in every case, and forms vary by carrier and by state. Have a licensed advisor review your own policy and your own contract before you rely on any of it.
Last updated: Reviewed by the Morrow commercial lines team. Last updated August 2026.