Definitions in a Professional Liability policy for Design Professionals
It may be a part of the policy that you don’t pay much attention to but it is as important as the limits and deductible. The definitions in the policy give specific terms within a policy a clear description of what the insurance company intends to cover.
Here are some terms from policies of insurance companies that can may different from company to company.
Professional Services
“Professional Services” means services the Insured performs for others in the practice of an architect, engineer, land surveyor, landscape architect, construction manager, planner, interior designer, scientist, technical consultant, forensic engineer, expert witness or as defined by endorsement to the Policy.
It is important to understand what ‘Professional Services’ are covered under your policy because if your firm is offering services outside of the definition you may not be covered.
Predecessor firm
Predecessor firm means any design firm (partnership, professional association, limited liability partnership, sole proprietorship, limited liability corporation or corporation) as of the policy period inception date in Item 3 of the Declarations, which has undergone dissolution or is inactive and no longer providing professional services, and at least 51% of such firm assets and liabilities have been assigned, acquired or transferred to the Named Insured.
This is an important term to be aware of if you do have a firm you are dissolving does it have adequate coverage under the current policy.
Insured (specifically insured person)
“Insured Person” means any person who was, now is, or shall become:
- a duly elected or appointed director, officer, principal, partner, member or employee of the Named Insured, but only while acting on behalf of the Named Insured;
- a duly elected manager, member of the board of managers or equivalent executive of the Named Insured if it is a limited liability company, but only while acting on behalf of the Named Insured;
- temporary, or leased personnel of the Named Insured, but only while acting under the direct supervision and on behalf of the Named Insured;
- any retired or former director, officer, principal, partner, member or employee (including former temporary or leased personnel) of the Named Insured, but only while acting on behalf of the Named Insured, and solely with respect to Wrongful Acts committed while serving in their capacity as a current director, officer, principal, partner, member, employee, temporary, or leased personnel of the Named Insured.
Your design firm may hired temporary employees, is that an ‘insured’ that is going to be covered under your policy? Who are all of the insureds under your policy, be sure you understand who and who isn’t covered.
Every insurance carrier has different definitions in their policies that can affect how you are covered. Read your policy so that you understand what is covered under your policy. Please call or email your PUI Agent with questions.