Understanding limits of liability in a Professional Liability policy for Design Professionals. There are many parts to a Professional Liability policy and one of those areas is to be aware of is what the limits of liability are covering your firm for.
With a Professional Liability policy the limit of liability may look like $500,000 per claim and $1,000,000 aggregate or $2,000,000 per claim and $2,000,000 aggregate.
Limit of liability per claim – this is the amount that the insurance company will pay per claim within the policy period.
Limit of liability aggregate – this is the amount that the insurance company will pay for all claims within the policy period. So if your firm had more than one claim in a policy period, this is the maximum amount that the insurance company will pay.
A question that often gets asked is if claims expenses (attorneys, expert witness, etc.) are outside of the limits of liability. In most cases, depending on the carrier, the claims expenses are within the limits of liability on the Professional Liability policy.
What if your firm has an exhaustion of limits in the Professional Liability policy? What this means is that once the damages and claims expenses have exceeded the limit of liability in the policy then the named insured (design firm) is obligated to pay the excess.
Keep in mind with the limits of liability that a deductible amount may be involved as well. The deductible is typically outside the limits of liability, but always check your policy to be sure you understand.
As always read your policy so your firm has a full understanding of the limits of liability on the Professional Liability policy. Your PUI agent is here to help, please call or email with any questions you may have.