PLI Bodily Injury/Property Damage Exclusion 1

[dtn6770]

Is it common for professional liability insurance policies to contain bodily injury and property damage exclusions?

I’ve spent over a year convincing my employer that certain services they provide can be considered engineering services and that they need to have properly licensed staff and be a registered firm. It was a long and somewhat rough road but the company is a registered firm at this point.

I’ve recently been given a copy of the professional liability policy that covers the company and its employees and am somewhat put off by a bodily injury and property damage exclusion endorsement. The nature of our services is the evaluation of clients’ used process equipment leading up a change in performance characteristics (more flow, higher pressure, etc.). With the bodily injury and property damage exclusion my understanding is that the policy will only address claims concerning botched engineering that manifests itself as failed performance. However, there won’t be coverage for botched engineering that manifest itself as a ruptured pipe or vessel, gas release, explosion or fire and the ensuing claims for equipment repair/replacement or for any resulting injuries.

Unless I’m missing something I don’t think the policy, in its current form, addresses the scenarios that it’s most likely to be needed for. As such I’m not comfortable with the level of protection the policy provides the company or me personally.

I assume professional liability insurance can be provided with bodily injury and property damage coverage but I image it comes with a higher premium.

Comments…opinions…

 

[MiketheEngineer]

Call your lawyer

 

[Ron]

Personal liability and certain aspects of property damage are commonly excluded by Prof. Liability policies, since those are usually covered under general business liability policies. Professional liability insurance is to cover the damage resulting from errors and omission in the practice of one's profession....not general liability issues.

 

[dtn6770]

Thank you for your comment Ron. I believe we are in agreement but I'll pose an example to make sure.

Say that a client tasks my employer to add equipment to the top of a parking structure and part of that assignment is to evaluate that structure for its ability to support the additional weight of the proposed equipment. The analysis incorrectly determins the structure is adequate as is, the project advances and the new equipment is added. Two weeks later the structure collapses taking with it a number of privately owned vehicles and injures some folks in the process.

In this case the property damage and bodily injuries can be attributed to the errors in the engineering analysis and with the exclustions I mentioned in my original post our professional liability insurance would not cover any claims.

Agreed?

 

[Ron]

Generally, the carrier will try to exclude such damage, but if you have general business insurance it will be tapped as well. While as Mike noted you need to check with a lawyer, damages as a consequence of an error or omission might still be covered under the policy.

If this is a real case and you are being sued, then all of your insurance resources should be engaged to help you, whether professional or general liability.