What are claims expenses in an architects/engineers Professional Liability policy?
Claims expenses are all of the costs that are associated with the defense of your firm’s claim.
An example of the definition of claims expenses in a Professional Liability policy are as follows:
“Claim Expenses” means:
- reasonable and necessary fees, costs and expenses incurred in connection with the defense of a Claim for a Wrongful Act or a Pollution Incident if incurred by the Insurer, or by the Insured with the prior written consent of the Insurer; and
- all other reasonable and necessary costs and expenses resulting from the investigation, adjustment, defense and appeal of a Claim, suit or proceeding arising in connection therewith, if incurred by the Insurer or by the Insured with the prior written consent of the Insurer; and
- premiums for appeal bonds for covered judgments or bonds to release property used to secure a legal obligation, if required for a Claim for a Wrongful Act or a Pollution Incident against any Insured but only for bond amounts within the remaining Policy limit, provided, however, that the Insurer shall have no obligation to appeal or to obtain such bonds.
- Claim Expenses do not include any salary, overhead or other charges of or by the Insured for any time spent in cooperating in the defense and investigation of any Claim noticed under this insurance. Claim Expenses do not include costs or expenses incurred by the Insurer for Loss Prevention Assistance. Claim Expenses do not include any fees and expenses incurred prior to the date the Named Insured first provided notice of a Claim to the Insurer.
A key point for claims expenses in a Professional Liability policy is that they are typically within the limits of liability. For example, if your firm has expenses of $50,000 and the claim is $100,000, the total claim amount is $150,000. This will reduce your limits available by $150,000.
If there are any questions with regards to claims expenses please call or email your Professional Underwriters agent for assistance.