{"id":893121,"date":"2017-11-02T11:43:55","date_gmt":"2017-11-02T17:43:55","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=893121"},"modified":"2017-11-02T11:43:55","modified_gmt":"2017-11-02T17:43:55","slug":"professional-services-exclusion-may-not-coverage-think","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/professional-services-exclusion-may-not-coverage-think\/","title":{"rendered":"The Professional Services Exclusion: You May Not Have the Coverage You Think"},"content":{"rendered":"

Richard H. Monk, III | Bradley Arant Boult Cummings LLP<\/a> | October 23, 2017<\/p>\n

Could you be providing \u201cprofessional services\u201d that might lead to liability excluded by your commercial general liability policy? The answer may be different than you think.<\/p>\n

A recent unpublished Eleventh Circuit opinion provides a reminder that it is important to review your CGL policy and understand whether you are covered. The facts upon which the court relied in\u00a0Witkin Design Group, Inc. v. Travelers Property Casualty Co. of America<\/em>\u00a0appear simple enough. An intersection traffic accident resulted in the death of a young boy. The resulting lawsuit included a negligence claim against the landscape architect who designed and constructed the intersection. The landscape company called on its CGL insurer to defend and indemnify it from the claim. You can imagine the company doing so with the thought that a liability claim had been brought and its general liability policy would provide coverage for that claim.<\/p>\n

Like most CGL policies, however, this CGL policy contained a professional services exclusion that excluded coverage for claims \u201carising out of the rendering of or failure to render any \u2018professional service\u2019.\u201d Professional services were defined by the policy as \u201cany service requiring specialized skill or training<\/em>.\u201d The CGL policy said that professional services included:<\/p>\n

a. Preparation, approval, provision of or failure to prepare, approve, or provide any map, shop drawing, opinion, report, survey, field order, change order, design, drawing, specification, recommendation, warning, permit application, payment request, manual or inspection;<\/p>\n

b. Supervision, inspection, quality control, architectural, engineering or surveying activity or service, job site safety, construction contracting, construction administration, construction management, computer consulting or design, software development or programming service, or a selection of a contractor or subcontractor; or<\/p>\n

c. Monitoring, testing, or sampling service necessary to perform any of the services included in a. or b. above.<\/p>\n

But, these are merely non-exhaustive\u00a0examples<\/em>. The Eleventh Circuit was clear: \u201cthe professional service exclusion applies to any service requiring specialized skill or training.\u201d Because the claim for which the landscape company sought coverage arose out of its design and construction of the intersection, which required specialized skill or training, the court found the professional liability exclusion applied, resulting in no coverage under the CGL policy.<\/p>\n

The Eleventh Circuit\u2019s opinion is not ground-breaking. Whether an insured\u2019s conduct constitutes excluded \u201cprofessional services\u201d is a frequently litigated coverage question, which turns on policy language, the insured\u2019s specific conduct, and applicable state law\u2019s definition of professional services. Other recent examples of cases in which courts have found no coverage because of professional services exclusions include a\u00a0claim against a home inspector\u00a0alleging failure to discover insect and water damage; a\u00a0claim against a real estate broker\u00a0who failed to disclose an adverse property condition; a\u00a0claim against a property manager\u00a0for failing to properly supervise construction; and a\u00a0claim against an insurance company\u00a0for misrepresenting insurance policies.<\/p>\n

Simply because a professional services claim is excluded by the CGL policy, however, does not always mean that the insured is left holding the bag without insurance coverage. Many companies purchase professional liability policies, which are errors and omissions policies intended to provide coverage for claims arising from the specific professional services in which the insured is engaged. It is critical to understand, however, that these policies may define \u201cprofessional services\u201d differently than the insured\u2019s CGL policy, and care should be taken to ensure that your professional liability policy covers what your CGL policy may exclude.<\/p>\n

So, while the Eleventh Circuit\u2019s recent decision is not ground-breaking, it does provide a useful reminder to think about whether you have the liability coverage that you think you have. We suggest that you consider the following questions, and discuss them with your broker or attorney if necessary:<\/p>\n