As a project manager, you are responsible for overseeing work that requires the efforts of a group. Whether you work in architecture, engineering, or another building design field, you are a leader who uses their skills to keep employees, vendors, subcontractors, and clients on track. Scope, cost, speed, scheduling, and the input of stakeholders are all within your domain of responsibility. With so many variables under your control, it’s crucial to keep your eye on the ball. Errors or mistakes on your part can trickle down, affecting employees and creating chaos in your organization.

Running a project management firm can come with a number of liabilities and risks. In your professional work, you may be liable for any mistakes or omissions that you make, and unhappy clients can file suit against you, whether or not your firm is at fault. Aside from your professional duties, your firm may also face risks from unfortunate incidents like on-the-job accidents or natural disasters. To better prepare your business for the financial consequences of an unexpected event, ensure your firm is protected by a comprehensive business insurance plan. With the right policies, you can provide financial protection for your business and your employees when the need arises.

You should consider purchasing business insurance for your business if:

• You would like to insure your services and practice against claims of poor performance or errors in your work
• You store employee or customer data like Social Security numbers or personally identifiable information (PII)
• You employ others and provide benefits like health insurance or retirement plans
• You lease or own your own office building
• You store valuable equipment or property in your office
• Clients or vendors visit your office

What insurance coverage do I need as a project manager?

While there are a number of business insurance types to consider, there are only a few that are acutely important to project management firms. Professional liability insurance, which protects firms against lawsuits related to their professional services or advice, is of particular importance to project managers. Below, we’ve listed the major coverages, along with a few examples, you should pay attention to.

Professional Liability Insurance

Errors or omissions in your work can end up causing significant financial damage and lead to lawsuits and claims against your firm. Professional liability insurance, also known as errors & omissions insurance, can protect you from potential client lawsuits stemming from the performance of your professional duties. Professional liability insurance is one of the most important coverages a project manager can obtain, as project managers are highly susceptible to these claims. These lawsuits may emerge from a number of allegations, including claims of negligence, breach of duty, poor performance, and more. Regardless of whether your company is at fault, these types of lawsuits can financially cripple your business.

Examples:

• Errors/Negligence: A local government hires your firm to build an extension to their cross-town rail line, relying on you for the design, engineering, construction, and project management. The project ends up being $2 million over budget and a year late, due to a series of missteps by your firm, including faulty construction and building code violations. Your firm is sued for damages.
• Performance: Your firm is hired to design, build, and manage the expansion of a local country club. You promise the owner that the plans will be completed within a year, but they wind up taking much longer. The owner discovers that the expanded timeline was caused solely by faulty resource management. They sue you for poor performance.

General Liability Insurance

General liability insurance is a common coverage for all businesses, and this type of insurance protects your company from lawsuits claiming property damage, bodily injury, personal injury, or advertising injury caused by your business or your employees. General liability insurance is third-party insurance, meaning it covers you against claims by third parties, which don’t include your business or your employees. Third parties may include customers, vendors, or landlords.

Examples:

• Property damage: Your firm is managing the 5G expansion of a local telecommunications company, putting new cell towers up at various locations. At one tower, as an employee is installing a new antennae, he accidentally drops some of his equipment, damaging the roof of a nearby office building. General liability would cover the damages caused.
• Bodily injury: A client visits your office to monitor how her infrastructure project is progressing. After the meeting, she leaves your office by taking the stairs. Unfortunately, her high heels get caught in a grate, causing her to trip and fall, resulting in a broken leg. She wants to sue your firm for bodily injury.

Commercial Property Insurance

When it comes to your own office and business property, you want to make sure that you’re adequately protected from any unfortunate events. Commercial property insurance helps protect the value of the physical assets your firm owns or leases if that property is damaged or lost due to accidents or disasters. This type of insurance covers property such as buildings, equipment, inventory, furniture, artwork, and computers. Commonly covered causes of loss include fire, lightening, wind, hail, explosion, theft, and vandalism.

Examples:

• Buildings: You work out of a building near a local middle school. Over the Halloween weekend, your building, along with the rest of the buildings on your block, are vandalized. Graffiti is tagged all along your exterior walls and windows. Luckily, your commercial property insurance covers vandalism and will reimburse you for the cost of damages.
• Contents: The pipes in your office burst, and the water destroys your new carpeting, along with all of the wooden furniture you own. Commercial property insurance will cover the costs to replace the carpet and furniture.

Workers’ Compensation Insurance

Workers’ compensation insurance provides financial benefits to employees who suffer work-related illnesses or injuries while employed by your business. In most states, businesses that have employees are required to carry workers’ compensation insurance. In exchange for accepting workers’ comp benefits, an injured employee agrees to not sue your business for the injury. Workers’ compensation insurance is no-fault, which means that it pays benefits regardless of whether the employer or employee is at fault for the injury.

Workers’ compensation can cover the costs of:

• Funeral expenses
• Disability benefits
• Medical expenses
• Rehabilitation costs
• Death benefits
• A portion of lost wages

Example:

• Your firm is hired to manage the building of a new hydroelectric dam. While on site, one of your project managers trips on a rock and hits his head on a piece of rebar. He is rushed to the hospital, where he is diagnosed with a concussion. He can’t work for two weeks. Workers’ compensation pays for the cost of his medical care, as well as a portion of his lost income.

Business Owner’s Policy

A business owner’s policy, also known as a “BOP,” is a special bundling of policies that can provide coverage for risks that are common to small business owners. BOPs combine property, general liability, and business income and extra expense insurance coverages for qualified small businesses. Importantly, a business owner’s policy can help you save money, with lower premiums than buying the individual coverages separately.

Final Word

Project management involves heavy coordination, attention to detail, and the ability to bring together various groups of people to work cohesively. As a project manager, you must juggle many different initiatives and requests all at once. With so much going on, it may be easy to forget about fundamental business insurance coverage, but don’t make this mistake.

To protect your company against lawsuits related to your professional work, damage from natural disasters, and a host of other risks, make sure you’re covered by the right insurance policies. From general liability to commercial property insurance to workers’ compensation, there are a number of coverages that will help to protect not only you and your company, but your employees as well.