Claim Scenarios
Is your professional liability and general liability insurance provided by two carriers? There are advantages when all of your coverages are with one insurer. Consider these scenarios:
Claim Scenario #1
A civil engineer at a construction site gets frustrated with the mud surrounding their trailer. He trudges around the site, finds a hose, goes back to the trailer, and begins hosing it down. He leaves this task before completing it to take a phone call.
A bicycle messenger making a delivery to the site travels over the hose at an accelerated speed, is thrown from the bike, and suffers numerous broken bones and other serious injuries.
Under which policy is this claim covered?
It doesn′t require specialized skill or training to hose down a trailer and this wasn't part of the engineer′s professional services. Therefore, the general liability policy covers this claim.
Claim Scenario #2
An interior designer designs the lighting fixtures himself for the 450 guest rooms at a hotel. When they are completed, he discovers that due to a communication error, the fixtures, which were produced overseas, do not meet UL standards. All 450 fixtures must be replaced. The foreign manufacturer claims that the designer did not communicate this requirement, so they′re not responsible.
Under which policy is this claim covered?
Our answer is that the design of products is excluded under professional liability insurance. Product liability IS covered under general liability insurance, but with restrictions. In this case, it’s the professional liability coverage that would provide the defense since the interior designer selected a manufacturer that did not meet UL standards. Professional liability insurance would not indemnify for the defective product, but would defend and potentially indemnify for the failure to select an appropriate manufacturer who was familiar with UL standards.
Claim Scenario #3
A structural engineer is called on an emergency basis to determine the structural integrity of a building that has been damaged. Unknown to the engineer, there has been damage to an underground gas line, which is leaking gas into the building. The engineer does not warn the building occupants or the people in adjacent buildings because he is unaware of the harm. After the engineer leaves, a fire breaks out. A number of people are seriously injured. Several parties make a claim against the engineer for failure to warn of the unsafe condition that caused the fire.
Under which policy is this claim covered?
This one is less clear cut than some of the previous examples. Should a structural engineer be aware of damage to an underground gas line? Maybe, maybe not, depending on how much time he spends on the site, what his scope of service is, and how much he′s being paid to make his assessment. Our guidance here is along the same lines as we stated in some of the previous examples. If it would take a specialized skill or training to become aware of the damaged gas line, then it′s probably a professional liability claim. But if any person of average intelligence would have noticed the damage and the potential for harm, then it′s probably a general liability claim.
Eliminate Finger Pointing
Often what happens in these scenarios is that the insured reports the claim to both the professional liability and general liability insurer and they work out:
- who will pay to defend the insured and
- what happens if there is any damage proven to be caused by the insured′s negligence.
Having your professional liability and general liability coverage with one insurer helps make this cooperation easier. With only one insurer, it′s an internal accounting issue, not a situation where two insurers are each trying to point the finger at the other. And that′s what we mean when we describe the RLI insurance program for design professionals as “holistic.”
