Common Professional Liability Requirements – Contract Tip of the Week

Q: What are some common professional liability insurance requirements in contracts that are actually not available in the commercial insurance marketplace?

A: RLI’s professional liability insurance policy does not provide coverage on a primary, noncontributory basis. Because clients are not named as additional insureds, professional liability insurance does not contain a separation of insureds provision or a cross liability/severability of interests provision. Furthermore, professional liability insurance in the United States is typically written with both a per claim and aggregate limit. Finally, a typical professional liability insurance policy covers an entire practice for the policy term, so there can be no commitment to a particular client or project that limits will be unimpaired or dedicated to that project. There are some methods to obtain project specific insurance, which The Risk Specialty Group can review with you.

The Risk Specialty Group and RLI Design Professionals are pleased to feature our Contract Tip of the Week series. Each week, we’ll review a question submitted by a design firm relating to the subject of contracts. Keep in mind, though, that these discussions are general in nature and in making specific business decisions, it’s important to review your options with a knowledgeable attorney.