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By: Richard Hertzberg, CPCU, ARM, Vista International Insurance Brokers
RISK MANAGEMENT FOR LAND SURVEYORS
Uninsurable Professional Liability Coverage Requests
Watch out for this stuff
We’re in complicated and confusing
legal territory now. Your client may
ask you to provide protections that aren’t
insurable.
This article will explore three uninsurable
requests you may receive from a client.
While coverage is similar from company
to company, there are no standard
policies so you will have to carefully read
your policy, and when in doubt, contact
your insurance company or broker.
What is Professional Liability
Insurance?
Professional Liability basic coverage
provides payment on your behalf for damages
resulting from your negligence in providing
professional service. It’s your errors
and omissions, malpractice, mistakes that
ultimately result in property damage or
bodily injury that affects your client. Of
course there are exclusions, modification,
limitations. Again, it is important to read
your policy carefully.
Uninsurable Request #1: Naming Your
Client as Additional Insured
Your client may request that you name
them as additional insured on your policy.
This may be done with a General Liability
policy but may not be done with a
Professional Liability Policy. If your client
was named as additional insured on your
Professional Liability policy, they would,
in fact, be insuring themselves for professional
services which they don’t provide.
If you have a General Liability policy
you may provide additional insured status
to a client which, in essence, shares your
insurance.
Uninsurable Request #2: Contractual
Liability Coverage
You can’t give it away! It is more complex
than additional insured and equally
important to understand.
Contractual liability coverage can be
provided under a General Liability policy
but is excluded under a Professional
Liability policy - except for that which
would be covered under tort or common law.
Here’s a contractual liability exclusion
from a Markel policy that reads “any claim
based upon or arising out of the assumption
of liability in any contract or agreement
including but not limited to hold
harmless and indemnity clauses, warranties,
guarantees, certifications or penalty
clauses; provided, however, this exclusion
shall not apply to liability that the
insured would have in the absence of the
contract or agreement.”
The Chartis contractual liability
exclusion says, “the liability of others
assumed by any Insured under any contract
or agreement unless such liability arises as
a result of a Breach of Professional Duty
by the Insured in performance of
Professional Services and would have
existed absent such contract.”
So, you can indemnify your client as
much as you want, but your Professional
Liability policy won’t cover them like a
General Liability policy. This is because
Professional Liability policies are only
covering your professional services that
would be covered, absent a contract, under
tort or common law.
Uninsurable Request #3: Indemnity
Agreement Provisions
Often, a client will request a broad
form indemnity agreement which includes
indemnification for everything - including
the client’s negligence. This will not be
insured under your Professional Liability
policy.
A limited indemnity agreement, which
may be insured under your Professional
Liability policy, covers you only for your
damages to the client caused by your negligence
in performing or furnishing professional
service.
What You Should Do
Be cautious! Insurance issue can be a
complicated maze, Read your policy carefully
and when necessary, ask for legal
advice or assistance from your insurance
company.
If you decide to sign-off on requests
for things that are uninsurable - remember
you are on your own and if something happens,
the damages will come out of your
own pocket.
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