Exhaustion of limits of liability on an architects/engineers professional liability policy-

Once the limits of liability, including the aggregate limit of liability, have been exhausted your firm is responsible for the balance of the claim.   Understanding the exhaustion of limits of liability is important when choosing a limit of liability on your professional liability policy.

The professional liability policy limits of liability are for not only the settlement amount but it also includes the defense amount. Some policies, such as general liability, do not include defense in the limit of liability. Defense can be a costly part of the overall claim and should be considered when choosing limits of liability.

Here is an example of the policy wording about exhaustion of limits of liability.

The Company is not obligated to pay any Damages or Claim Expenses or to defend or continue to defend any Claim after the applicable “Each Claim” or Policy Aggregate” Limits of Liability has been exhausted by the payment of Damages or Claim Expenses or any combination thereof; or after the Company has deposited the remaining available “Each Claim” or “Policy Aggregate” Limits of Liability into a court of competent jurisdiction or tendered the remaining available “Each Claim” or “Policy Aggregate” Limits of Liability to the Named Insured or, if applicable, to the excess insurer(s) of the Named Insured. In such case, the Company shall have the right to withdraw from the further investigation, defense or settlement of such Claim by tendering control of said investigation, defense and settlement of the Claim to the Insured.

Once the limits of liability is exhausted, your firm is responsible for the remainder of the expenses and settlement of the claim. This includes the aggregate limit of liability, if your firm were to have multiple claims in a policy period. If you have any questions about exhausting limits of liability please call or email your Professional Underwriters agent for assistance.