The “Professional Services” Exclusion

You run a small business.  Someone allegedly gets hurt while on your premises and you receive a letter from her attorney notifying you of the claim.  You advise your insurance company, fully expecting them to come to your rescue and provide you with counsel to defend your business against the injury claim.

But then, to your amazement, your insurance company sues your business.  Why?  They are asking the court to determine that there is no coverage for your business because of a provision in your CGL policy known as the “professional services” exclusion.  What is this exclusion all about?

“Claims based on negligent performance of commercial or professional services are ordinarily insured under ‘errors and omissions’ or malpractice policies.  For this reason, CGL policies typically exclude claims arising out of professional or other business services.”  Tri-Etch, Inc. v. Cincinnati Ins. Co. 909 N.E.2d 997, 1002 (Ind. 2009), citing Erie Ins. Group v. Alliance Envtl., Inc., 921 F.Supp. 537, 541 (S.D.Ind. 1996).

There may be exceptions to the “professional services” exclusion, and your business may, in fact, have coverage for the claim — even if the insurance company argues there is not.  Every situation is different.  For an evaluation of your situation, contact us.