Insurance is my life, my career, my profession. I joined US Risk in November, 2005 and am based in the Nashville, TN branch office.
I'm active in industry associations and work as a wholesaler broker, almost exclusively with professional liability lines. The majority of my clients are main street agents who rely upon me to provide the technical expertise and market knowledge to allow them to easily and efficiently write professional liability accounts of all shapes and sizes.
Contingent Bodily Injury/Property Damage Part 2 (5/8/08 Knowledge Knugget)
How can a professional liability policy cover contingent BI/PD?
Keep in mind that the following examples do not apply to design professional or healthcare liability policies, where the risks have a direct exposure, and the policies address it accordingly.
1. A policy may have no BI/PD exclusion. This is rare and does not actually extend coverage. The carrier may still put forth an argument about the BI/PD having arisen from the rendering of or failure to render professional services, since the damage would not be a direct result of the services, but rather an outgrowth of a third party's use of or reliance upon those services.
2. A policy may have a BI/PD exclusion with narrow wording. A typical exclusion applies to claims "arising from, related to, or in any way connected with bodily injury or property damage....". This wording can be used to exclude coverage for any claim where bodily injury or property damage is at the root of the harm. A narrower exclusion that says the policy does not apply to claims "...for bodily injury or property damage..." is generally understood to apply to direct infliction of harm, leaving the door open for contingent claims.
3. A policy may have a BI/PD exclusion with a carveback for claims arising from the delivery of professional services. Wording such as "....however, this exclusion does not apply to claims arising from...." This is a pretty straightforward solution and is just about the best you can get.
4. An affirmative coverage grant would be the best possible way to address this exposure. It is not common. With an affirmative coverage grant, BI/PD could be included in the definition of Wrongful Act. We do frequently see "Personal Injury" included in the definition of Wrongful Act for some classes of business, such as real estate or insurance agents.
Think through this example:
A software developer creates a program that operates a robot on an assembly line. The robot goes haywire and starts knocking parts off the conveyor belt, and thrashing around, destroying equipment. Which exclusion or coverage clause would you prefer?
Check the blog in the next couple of weeks for more detailed explanations and thoughts beyond the scope of the Knowledge Knuggets.