The Definition of a Professional Liability Claim

“Claim” means a demand for money or services, including, but not limited to, a complaint in a civil proceeding in a court of law or in an arbitration proceeding, received by an Insured arising out of one or more of the following: (1) a Wrongful Act; (2) Pollution Incident; or (3) Network and Information Security Breach. Remember that a demand can be oral or in writing. If any party is asking a Design Professional (“DP”) to pay for anything on a project, a Claim has been made, well before a lawsuit is contemplated.

Some typical ways that Claims are first made against a DP:

• Client or Contractor alleges that the DP made an error and it is going to add to the project cost so that the DP should pay towards the additional expense.

• Client complains about change orders so that the project being over budget and suggests that the DP should bear some of the financial burden.

• Client advises of a component failure after the project is complete and wants the DP to pay for a fix.

• Contractor seeks additional compensation for delay due to design errors or omissions and the Client wants the DP to pay.

• Client is withholding payment of DP fees due to alleged design errors or delay.

• Client demands a defense and indemnity from a DP due to an injury during construction.

• Client demands that the DP provide a defense and indemnity after a member of the public is injured due to some component of the design.

It is important that you put your insurance carrier on notice in writing when an issue first arises.  Failing to do so may result in a loss of coverage.