How We Placed Cover for a Declined Engineering Firm

A geotechnical engineering firm came to us after being declined by two insurers. Their existing broker had tried the mainstream market and come back empty-handed. The firm needed professional indemnity insurance to continue operating, and their current policy was about to expire.

This isn’t unusual. Jack on our team deals with declined engineering PI at least a couple of times a month. Engineering firms - particularly those in niche disciplines like geotechnical, facade, environmental, and structural - are among the hardest professional indemnity risks to place in the Australian market.

Here’s what happened, what we did differently, and what it tells you about placing engineering PI when the mainstream market says no.

Why was the firm declined?

The firm was a small geotechnical consultancy - a handful of engineers providing soil testing, foundation design, and site classification reports for residential and commercial projects.

On paper, that doesn’t sound hard to insure. But the mainstream market has a problem with geotechnical engineering for a few reasons:

• Subsurface risk - geotech work involves assessing ground conditions that are inherently uncertain. If a foundation design is based on soil testing that misses a problem, the consequences can be expensive
• Long tail exposure - defects in foundation design may not show up for years. Cracking, settlement, and structural movement can take time to develop, meaning claims can arrive long after the project is complete
• Niche discipline - many generalist insurers don’t have underwriters who understand geotechnical engineering. If they can’t assess the risk, they decline it
• Limit requirements - the firm wanted to increase their cover to $5 million to target larger project work. Higher limits attract more scrutiny

The firm’s previous broker had submitted to two mainstream insurers. Both declined. One cited “outside our risk appetite for geotechnical disciplines.” The other wanted to exclude foundation design work - which was the firm’s core business.

What did Tank do differently?

When Jack reviewed the case, the first thing he identified was that the previous submissions were generic. The broker had used a standard PI proposal form without providing the detail that specialist underwriters need to assess a geotechnical risk.

Here’s the process we followed:

1. Detailed risk assessment

We sat down with the firm and went through their work in detail:

• What types of projects? Residential site classifications, commercial foundation design, retaining wall assessments, contamination testing
• What’s the revenue split? Mostly residential site classifications (lower risk) with some commercial foundation design (higher risk)
• Quality assurance processes? Peer review on all commercial reports, standardised testing procedures, accredited laboratory analysis
• Claims history? One notification two years prior (a minor dispute over a site classification that was resolved without payment). No open claims

This level of detail matters because it changes how the underwriter sees the risk. “Geotechnical engineering firm” sounds risky. “Firm that does mostly residential site classifications with peer-reviewed processes and one minor notification that was resolved” sounds manageable.

2. Targeted market approach

Instead of going to the mainstream market again, Jack went to specialist professional indemnity underwriters - the ones who actually understand engineering risks. These include Lloyd’s syndicates and specialist Australian underwriters who focus specifically on design and construction professionals.

We submitted to three specialist markets with a detailed cover note explaining the firm’s work, risk management, and claims history. Not a one-page proposal form - a full submission that gave the underwriter enough information to say yes.

3. The result

Two of the three specialist markets offered terms. The firm was placed with a specialist underwriter at a $5 million limit, with:

• Full cover for geotechnical work including foundation design
• Retroactive date preserved from the previous policy
• The prior notification disclosed and accepted without exclusion
• Premium competitive with what the firm had been paying at a lower limit

The whole process took about three weeks from the initial conversation to cover being bound.

Why does this happen so often with engineering firms?

It’s not just geotechnical. We see declined engineering PI across multiple disciplines. Tank Insurance currently looks after engineering firms across structural, civil, geotechnical, facade, environmental, and electrical engineering.

The common thread is that engineering disciplines involve technical risk that generalist insurers aren’t equipped to assess. When an underwriter doesn’t understand the risk, the default answer is no.

Disciplines we regularly see declined by mainstream insurers include:

• Geotechnical engineering - subsurface uncertainty and long tail claims
• Facade engineering - cladding and weatherproofing risks, particularly post-Grenfell
• Structural engineering - high consequence of failure, especially for multi-storey or complex structures
• Environmental engineering - contamination and remediation liability
• Fire engineering - life safety implications and regulatory scrutiny

In each case, the issue isn’t that the firm is uninsurable. It’s that the mainstream market doesn’t have the appetite or expertise to underwrite the risk. A specialist broker with access to the right markets can almost always find a solution.

What should you do if your engineering firm has been declined?

If you’ve been declined for PI insurance, here’s what we’d recommend:

1. Don’t panic - a decline from one or two mainstream insurers doesn’t mean you’re uninsurable. It means the mainstream market isn’t right for your risk
2. Talk to a specialist broker - not all brokers have access to specialist PI markets. You need one who works with specialist underwriting agencies, including those with Lloyd’s syndicates and other specialist markets.
3. Prepare your information - the more detail you can provide about your work, your processes, and your claims history, the better. Generic proposal forms won’t cut it
4. Be upfront about claims - if you have prior claims or notifications, disclose them fully. Specialist underwriters are used to seeing claims on engineering PI. What they don’t like is finding out about them after the fact
5. Allow time - specialist placements take longer than mainstream ones. If your policy is expiring soon, start the process early. Ideally 6-8 weeks before renewal

Jack often says the difference between a decline and a placement is how the submission is prepared. The same risk, presented properly to the right market, gets a completely different result.

If you’re looking to increase your PI cover to pursue larger projects, we covered the process in our guide on hard-to-place professional indemnity.

Frequently Asked Questions

Why do engineering firms get declined for PI insurance?

Common reasons include niche disciplines that mainstream insurers don’t understand (geotechnical, facade, environmental), prior claims or notifications, higher limit requirements, work in high-risk sectors, and retroactive date gaps. Specialist work carries risk profiles that generalist insurers aren’t set up to assess.

Can a broker help if my engineering firm has been declined?

Yes. A broker with access to specialist underwriters and Lloyd’s markets can often place cover that direct channels and generalist brokers can’t. The key is preparing a detailed submission that explains the discipline, risk management, project types, and claims history properly.

How much does PI insurance cost for engineering firms?

It varies based on discipline, revenue, limit, and claims history. Based on our engineering portfolio, PI premiums range from about $1,000 to $5,000 for sole practitioner consultants to $20,000+ for larger firms or niche disciplines. Hard-to-place risks typically attract higher premiums.

Need engineering PI placed?

If your engineering firm has been declined or you’re not confident your current broker understands your discipline, talk to us. Tank Insurance looks after engineering firms across structural, civil, geotechnical, facade, environmental, and electrical disciplines.

Jack on our team specialises in hard-to-place PI and works with specialist underwriters who actually understand engineering risk.

Call us on 02 9000 1155 or email [email protected].

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This is general information only and does not take into account your objectives, financial situation, or needs. You should consider whether the information is appropriate for you and read the relevant Product Disclosure Statement (PDS) before making any decisions about insurance products.