Bankers: Be Aware of These Common Professional Liability Insurance Exclusions

Over the years, insurance companies have been creating insurance policies for practically everything imaginable for business professionals. From Professional Liability Insurance to civil money liabilities, those who want to start a business or keep a current business going should take note of how they should be covered. But one size does not fit all when it comes to not only coverage, but exclusions. Finding yourself in a situation where you have to use the coverage you pay for but can’t use it due to policy restrictions is not ideal.

It’s important to understand well in advance what is covered and what isn’t in your chosen policy or policies. If someone files a lawsuit against your business or practice coverage like Professional Liability Insurance pays for legal defense costs as well as possible settlement. Here’s a look at the most common exclusions on Professional Liability Insurance policies.

Common Exclusions in Professional Liability Insurance, Listed

  • Employment: Professional Liability Insurance policies don’t cover anything arising out of any claim made by a person because of
    • Refusal to employ that person,
    • Employment-related practices, policies, acts or omissions, such as coercion, demotion, discipline, defamation, sexual harassment, or humiliation,
    • Termination of that person’s employment.
  • Sexual Therapy: Professional Liability Insurance coverage doesn’t cover anything that is brought up during sexual therapy, where sexual contact is a form of treatment.
  • Discrimination: In the case of actual or alleged discrimination this policy doesn’t provide coverage. This exclusion relates to an employer’s liability or in any other capacity; and to any obligation to share damages with or repay someone else who must pay damages.
  • Physical or Sexual Abuse: This coverage doesn’t cover anything arising from allegations related to physical and/or sexual abuse. The insurance carrier can provide coverage, however, if the claim is unfounded, and the insured doesn’t admit to guilt.
  • Faulty Workmanship: Construction and installation processes present a number of different legal issues. Not everything goes according to plan, so understanding that Professional Liability Insurance doesn’t cover the above listed services along with demolition is important.

It is imperative for companies to have a keen understanding of just what exactly is covered in their plan. The various types of risks any company or practice may face should be met with not only access to coverage, but knowledge of policies that cover possible risks. Opting out of certain coverage? Therein lies risk itself by choosing to not pay for specific coverage. Staying on top of your company’s policies and exclusions helps to keep everything balanced and transparent.


About Financial Guaranty Insurance Brokers

Since 1983, Financial Guaranty Insurance Brokers has distinguished itself as a provider of Professional Liability, Cyber Liability, and Crime insurance products for entities of all types. To receive timely, personalized service from a knowledgeable and experienced staff, call us today at (626) 793-3330 to speak with one of our professionals.