Exploring the concept of professional services
by Kent W. Collier
November 15, 2017

legal standard of care for professionals (i.e., to perform without negligence using the same skill as other professionals under similar circumstances). Compliance with law, without a qualification related to the applicable standard of care, is also problematic and may result in an uninsured professional exposure. Many contractors would not hesitate to agree to such a warranty, but this clause should be amended with respect to professional services.

Subconsultant limitations of liability are another area for scrutiny when performing professional services. When contractors hire architects, engineers or other professionals to delegate professional services, they often receive proposals, sample
contracts or marked-up agreements with a limitation of liability. From the design professional’s perspective, there are several good arguments for why a limitation of liability is appropriate.

For the contractor, however, agreeing to such a limitation can create a liability gap that must be filled with the contractor’s professional liability insurance. Many insurers limit the availability of protective indemnity where there is an underlying limitation of liability. Therefore, contractors must know what their insurance states and negotiate contracts in a way to maintain their available coverage. All contractors should regularly assess their scope of work to determine exposure for professional services that are excluded from CGL insurance.