Thursday, May 29, 2008

Contingent Bodily Injury/Property Damage Part 1 (5/1/08 Knowledge Knugget)

What is "contingent bodily injury/property damage" coverage? And why do you care?

General Liability policies cover bodily injury or property damage arising from the insured's operations or products. They also generally exlude claims arising from professional services, thereby limiting coverage for a professional to premises liability.

Professional Liability policies cover claims for damages made against the insured by a third party arising from a Wrongful Act. The Wrongful Act is generally an error, act or omission in the rendering of or failure to render professional services.

For most classes of professional liability coverage (Architects and Engineers, and Medical Malpractice being the notable exceptions), there is some kind of exclusion regarding claims arising from bodily injury or property damage.

What happens if your insured is a home inspector, and he fails to notice a leak in the roof? The leak goes undetected until the ceiling collapses. Could he be liable for the collapse? Would his GL policy respond?

If we want the home inspector to have coverage for property damage that occurs due to his negligence, we need to make sure that his professional liability policy provides contingent bodily injury/property damage coverage.

The "contingent" part of that phrase refers to the BI/PD arising *as a result of* his professional services. They are not a result of his direct actions. They are a result of others relying upon his expertise.

More examples and detail to follow next week......


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Cindy Dy said...

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