We have covered the role of the professional services exclusion in both General Liability (GL) and Directors & Officers (D&O) insurance policies previously (see here, here and here), but a recent client interaction demonstrates the importance of not taking client education for granted. The insured was not sure why professional services were excluded from the D&O policies they were reviewing, and actually thought there were defects in the policy forms. As part of our support of our retail insurance agent client, we pointed out:
D&O policies have a professional services exclusion for a reason, and the inclusion of the professional services exclusion is not a defect in the D&O form(s). With the exception of a few specially targeted forms, D&O policies do not contemplate covering professional liability exposures. The reason is that the professional liability exposure is typically different from the D&O exposure and can vary widely between insureds. The thought is that the professional exposure should be underwritten and covered separately – within an E&O policy. The intention is to motivate a discussion of exposures and cover professional services under a separate E&O policy.
Other sources support this:
- As part of a D&O policy, the intent of the exclusion is similar: to preclude coverage of traditional professional services that are sometimes performed by individuals covered by the D&O policy but should be separately insured. (IRMI: see here)
- A court case summary touched on this as well: The opinion highlights the need to ensure that potential coverage gaps created by the professional services exclusion are bridged by errors and omissions coverage. (STB Law: see here)
It is relatively easy to obtain E&O coverage for all types of professional exposures, but the exposures should be underwritten and covered in a policy form designed specifically for the exposure.