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Bodily Injury/Property Damage Exclusions

by Mary Salerno, National Accounts Manager
Most Insurance Agents E&O policies contain some type of exclusion for bodily injury and property damage claims.  Insurance agents and brokers typically do not expect their E&O policy to cover claims for bodily injury and property damage (BI/PD), however, they do expect their E&O policy to cover claims for wrongful acts in placing or failing to place insurance policies on behalf of their clients.

The language found in your E&O policy's bodily injury and property damage (BI/PD) exclusion may determine whether your E&O claim is paid or denied. Many E&O policies contain an exclusion such as the following:

Excludes claims "based upon, arising out of, attributable to, or directly or indirectly resulting from Bodily Injury or Property Damage."  Bodily Injury almost always includes "emotional distress and/or mental anguish" within its definition found in the policy.  This type of exclusion is broad in scope and contains several avenues by which a claim for negligence can be denied by your E&O carrier.  The following phrases are key in reviewing the BI/PD exclusion in your policy:

EXCLUSIONS:"arising out of"
"attributable to"
"directly or indirectly resulting from"

Suits against insurance agents and brokers, often contain allegations of failing to provide adequate coverage.  Such allegations arise when GL or property claims of their clients are denied by an insurance carrier.  These suits often allege bodily injury, property damage or mental anguish as a result of your placement of the wrong or inadequate coverage.  Depending on the particular details and circumstances, the suit for failing to place adequate coverage will often be covered by a standard E&O policy.  However, allegations of bodily injury, mental anguish or emotional distress can often times be left uncovered because of the type of language found in your policy's BI/PD exclusion.  When an allegation is deemed "not covered," your E&O insurer is not obligated to provide any further defense.  This could leave an insurance agent or broker vulnerable not only for the cost of settling that part of the claim with the claimant, but also to paying attorney's fees and other expenses.  Even in a 'minor' claim, this could cost an insurance agency thousands of dollars.

What can you do?

To help mitigate against this type of uncovered claim we have been successful in getting many E&O carries to provide a  professional services "add- back."  This will not pay for the bodily injury claim, but can provide coverage for the  agency/brokerage for providing or failing to provide a Professional Service as defined in the policy.


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