Professional Liability Insurance
Common Professional Liability Exclusions for Contractors
Common Professional Liability Exclusions for Contractors — what contractors need to know to protect against professional liability claims.
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What Your PL Policy Won’t Cover — And Why It Matters
Professional liability insurance (also called Errors & Omissions or E&O) protects contractors when a client claims your professional advice, design input, or project management decisions caused them financial harm. It covers legal defense costs and settlements — gaps that general liability leaves wide open.
Bodily Injury and Property Damage Exclusion
PL policies exclude bodily injury and property damage — that’s GL territory. If a claim involves both professional services failure and physical harm, you may need both policies to respond. The PL covers the financial harm from professional error; GL covers the physical damage component.
Intentional Acts Exclusion
Deliberate wrongdoing, fraud, and criminal acts are universally excluded from professional liability. If you knowingly provide false advice or misrepresent your qualifications, PL won’t protect you. Coverage applies to unintentional errors and omissions, not intentional misconduct.
Prior Knowledge Exclusion
Claims arising from professional errors you knew about before the policy inception date are excluded. If you knew a design was defective when you purchased PL coverage, any resulting claim is excluded. Full disclosure to your insurer at application is essential.
Insured-vs-Insured Exclusion
Claims by one insured against another insured under the same policy are typically excluded. If two owners of the same firm sue each other for professional negligence, the policy won’t respond. This exclusion prevents collusive claims.
Pollution and Environmental Exclusions
Most standard PL policies exclude professional services related to environmental, mold, or asbestos work. Contractors providing environmental consulting, mold remediation specifications, or asbestos abatement design need specialty professional liability with pollution coverage included.