Architect and Engineer Liability Claim Costs Rise 62%
Design firms face rising legal defense expenses that effectively reduce their available policy coverage limits.
Updated on Oct. 15, 2026 in Construction
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Victor Insurance reports that average architect and engineer liability claim severity increased by 62% in the U.S. and 64% in Canada between the 2006-2015 and 2016-2025 periods. These rising costs, driven by construction inflation and legal fees, impact design firms across North America.
Why it matters
Design firms face higher costs to defend and resolve professional liability claims as legal expenses and project complexity increase. These rising costs reduce the available policy coverage for actual settlements, tightening the financial margins for firms involved in litigation.
Average architect and engineer claim severity jumped 62% in the U.S. and 64% in Canada when comparing 2016-2025 to the 2006-2015 period. Additionally, 32% of claims in the recent period closed with expenses only, accounting for nearly $220 million in legal and adjustment costs.
The players
Victor Insurance
An international underwriting manager providing specialized professional liability insurance solutions for architects and engineers.
The details
Rising loss costs are attributed to a combination of construction inflation, larger project scopes, and workforce shortages. Furthermore, the prevalence of social inflation and mounting legal defense expenses can erode policy coverage limits, leaving firms with less protection for indemnity payments.
Timeline
2006-2015 served as the baseline comparison period for claim severity.
2016-2025 represents the second period of analysis for liability trends.
October 14, 2026, marks the publication date of the Victor Insurance A&E Cost of Risk Report.
Market Landscape
This report highlights how social inflation in professional liability insurance consistently elevates legal defense costs for design professionals. The data aligns with industry trends where escalating legal expenses frequently outpace actual settlement growth.
Design firms should review their current policy limits to ensure coverage accounts for both rising legal defense costs and inflation-adjusted claim severity. It is prudent to consult with legal counsel or insurance brokers to evaluate if current risk mitigation strategies are sufficient against these higher adjustment costs.
The takeaway
The rise in 'expenses-only' claims indicates that simply defending a case now carries significant financial weight, even without an indemnity payout. Operators should track their internal cost of risk and update liability coverage benchmarks annually to reflect the shifting landscape of construction litigation.
Further reading
For more on industry risk management, see our Construction section.
Source note: This article includes information reported by Insurance Business.
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