Larry Cottrell, ARM
Senior Account Executive
Pillar Group Risk Management, Inc.
Indianapolis, IN (July 13, 2009) - As insurance products have become more varied and complex, there’s more potential for confusion. While most people have a pretty good understanding of how basic life, homeowners, and auto insurance policies work, liability coverage can be far more difficult to grasp. In today’s lawsuit-happy society, it’s important for companies and professionals to have a good working knowledge of liability coverage.
That’s particularly true for safety professionals. They often work in situations such as construction and manufacturing that present a substantial amount of potential risk for personal injury and property damage. Their role of minimizing the risk of injury to individuals in the workplace can actually increase their own risk of liability.
Take a safety professional who works on a construction site. Although that safety professional is very effective and makes the site a safe place, an incident occurs in which a worker is severely injured or there is substantial property damage. The professional may not have been negligent in his or her role, but could easily be named as a co-respondent in a lawsuit. In the eyes of the attorney seeking damages, the very existence of the safety professional on the site implies that something that was handled incorrectly or not at all was a factor in the injury or damage.
That isn’t an implausible situation. Based on real-life cases, the issue of negligence does not seem to be important. A professional who has been sued will have to provide a defense, whether or not he or she believes the suit is valid. During the discovery process, the attorneys and the court will determine if an act of omission or commission contributed to the injury or damage.
Professional liability insurance provides coverage for damages arising out of a “wrongful act” that falls under the policy’s definition of a professional service. For example, a safety professional’s professional liability policy will spell out the professional’s role and the normal services that are provided to clients.
While owners and contractors do have their own liability coverage for bodily injury and property damage arising out of an occurrence, those coverages generally exclude professional services. In other cases, the damage may not fall within the definitions of occurrence in the policy. That’s why most owners and contractors who engage safety professionals expect them to carry their own professional liability insurance. Typically, they’ll require a level of $1 million for each occurrence and in aggregate.
Owners and contractors should have contractual requirements for safety professionals that spell out all of the required coverages, including professional liability, general liability, automobile, workers compensation, and umbrella. The contract should include provisions requiring that a clause be added to spell out additional insured status.
From the safety professional’s standpoint, it’s important to ensure that the coverage’s definition of professional services reflects the services that are actually being performed, and that it is broad enough to encompass all activities. It’s also important to have coverage for contingent bodily injury or property damage arising out of a professional service. You see, most professional liability policies will exclude bodily injury and property damage. Policies should be amended to include bodily injury and property damage that occur a result of an error or omission in providing a professional service.
Some safety professionals who have umbrella liability policies attached to their homeowner’s coverage may believe that they are protected, but they probably are not. Typically, personal liability policies such as those included within a homeowner’s policy or a personal umbrella carry an exclusion for business pursuits.
Both safety professionals and the owners and contractors who engage their services would be wise to sit down with their insurance agents and develop a solid understanding of the coverage they have, as well as additional coverage that would protect them from the financial damage that could result from a lawsuit. That small amount of time invested in such a conversation could be one of the smartest investments they ever make.