Is contractual liability covered under my architecture/engineering firms’ policies?

Is contractual liability covered under my architecture/engineering firms’ policies?

First, what is contractual liability?  It involves the financial consequence emanating from liability, not the assumption of the indemnitee’s liability itself.  This is a common request in contracts and on certificates of insurance.  Most policies, including general and professional liability, will exclude contractual liability.

Professional liability exclusion

his policy does not apply to any Claim based upon or arising out of liability assumed by an Insured under any contract or agreement, whether oral or written, except to the extent that the Insured would have been liable in the absence of such contract or agreement.

General liability exclusion

“Bodily injury” or “property damage” for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement. This exclusion does not apply to liability for damages:

(1) That the insured would have in the absence of the contract or agreement; or

(2) Assumed in a contract or agreement that is an “insured contract”, provided the “bodily injury” or “property damage” occurs subsequent to the execution of the

contract or agreement. Solely for the purposes of liability assumed in an “insured contract”, reasonable attorney fees and necessary litigation expenses incurred by or for a party other than an insured are deemed to be damages because of “bodily injury” or “property damage”, provided:

(a) Liability to such party for, or for the cost of, that party’s defense has also been assumed in the same “insured contract”; and

(b) Such attorney fees and litigation expenses are for defense of that party against a civil or alternative dispute resolution proceeding in which damages to which this insurance applies are alleged.

There may be an endorsement that can be added to the general liability policy, check with your firm’s insurance company to find out if contractual liability can be added back.  If you have any questions with regards to a contractual liability please call, or email, your Professional Underwriter agent for assistance.contractual liability

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