Common Exclusions on Professional Liability Policies for Architects and Engineers

Most Professional Liability insurance companies have much similar exclusions on their policies.  It is important you read your firms policy to be aware of what the exclusions are for your firm.

Insure vs. Insured – Insurance companies will not pay for a claim in which you are suing yourself.  This also includes if you have ownership in another entity that entity files a suit against the Professional Liability policy.

Cost to repair or replace faulty workmanship – the policy is intended to cover design errors and omissions not for the actual construction portion of the project.  Here is an example of the wording from one of the insurance companies:

This policy does not apply to any Claim based upon or arising out of the cost to repair or replace faulty workmanship in any construction, erection, fabrication, installation, assembly, manufacture or remediation performed by any Insured, including the cost of materials, parts or equipment furnished in connection therewith.

Design or manufacture of sold or supplied goods or products.  The policy is for design of buildings such as houses and office spaces not for a product or software.  Below is an example from one of the insurance companies:

Based on or arising out of the design or manufacture of any products or goods which are sold or supplied by any Insured or by others under license from any Insured. However, this exclusion does not apply to software designed or modified for an individual client of the Insured in connection with the Insured’s other professional services for that client. In addition, this exclusion does not apply to the supplying of furnishings or fixtures by the Insured as part of interior design or decorating services.

Additionally the policies will not pay for claims that are from criminal activity, Workers Compensation type of issues, employment related and warranties or guarantees.

Always read your firms Professional Liability policy so that you understand what is included and excluded.  Please direct questions to your Professional Underwriter agent via phone or email.