The Importance of Definitions in Professional Liability Policies for Architects/Engineers
When reading your Professional Liability policy you may think that the definitions are not all that important. They are indeed very important, the definitions are the highlighted words throughout the policy and are very significant.
One example is the definition of ‘damages’ from two different companies:
“Damages” means a monetary judgment or monetary award which the Insured is legally obligated to pay, including statutory damages, punitive, multiplied, or exemplary damages where insurable by law, and prejudgment and post-judgment interest. Damages also means a monetary settlement to which the Company agrees on an Insured’s behalf.
“Damages” means monetary judgments or settlements the Insureds are legally obligated to pay as a result of a covered Claim, including but not limited to compensatory damages, pre-judgment and post-judgment interest. Damages does not mean punitive, exemplary or multiple damages unless insurable by law under which this Policy is construed.
They are essentially stating the same thing but the wording is slightly different for each insurance company.
Another example is a ‘pollution incident’.
“Pollution Incident” means the discharge, dispersal, release, escape, migration, or seepage of any solid, liquid, gaseous, or thermal irritant or contaminant, including smoke, soot, vapors, fumes, acids, alkalis, chemicals, hazardous substances, hazardous materials, or waste materials, on, in, into, or upon land and structures thereupon, the atmosphere, surface water, or groundwater, caused by the acts of an Insured in his or her capacity as such, or by any other person for whom the Insured is legally liable, and which results in Bodily Injury or Property Damage.
“Pollution Incident” means the actual or alleged discharge, dispersal, seepage, migration, or escape of smoke, vapor, fumes, acids, alkalis, chemicals, asbestos, liquid or gases, waste materials or other irritants, contaminants or pollutants into or upon the land, atmosphere or any watercourse or body of water, and caused by the Insured’s activities for others or by any entity or person that the Insured is legally liable for. Waste materials include materials to be recycled, reconditioned or reclaimed.
Again, the wording is slightly different and it can make a difference when it comes to a claim.
As always, read your policy to have a full understanding of what is covered and what is not covered from the definitions in the policy. Please call or email your Professional Underwriters agent.