Common Coverage Exclusions in Professional E&O Policies

Thu Dec 17th, 2020 on     Insurance Claims,    

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Professional negligence is a serious and career-long concern for licensed professionals, in Florida and elsewhere.  In order to avoid the potentially catastrophic financial risks posed by a lawsuit, professionals typically purchase errors and omissions insurance coverage (E&O) to protect them in the event of a lawsuit.

Unfortunately, it’s easy to assume that this protection will apply when you need it most — but insurance carriers often deny E&O claims, leaving the professional policyholder in a vulnerable position.

If you’re a licensed professional who has been sued for malpractice, then you may be feeling overwhelmed, anxious, and unsure of how to proceed — even if you have comprehensive E&O coverage.

We can help.

Here at Ver Ploeg & Marino, P.A., our team has decades of experience working with professionals throughout the state of Florida, helping them to submit successful insurance claims under their E&O policies.  When a claim is denied, we advocate relentlessly for our clients, working with them to challenge the decision of their insurance carrier and secure the coverage they deserve.

Ready to speak to an experienced Miami insurance claim lawyer at our firm?  Call us at 305-577-3996 or contact us online to schedule a consultation.  We look forward to speaking with you.

Before you move forward, however, you may be wondering what justifications the insurance carrier might use to try and deny your claim.  Oftentimes, the insurance carrier will argue on the basis of an exclusion.

These exclusions do not always apply — every insurance policy defines them differently, some more strictly than others.  Still, it’s worth understanding these exclusions so that you and your attorney can identify potential issues and navigate around them accordingly.

Consider the following.


Intoxication is not covered by E&O policies.  Generally speaking, highly reckless conduct (up to and including intoxication) is excluded.

Sometimes, however, the insurance carrier will take this “too far.”  For example, if you had a single drink on the day of the purported professional negligence, the insurance carrier may attempt to paint you as intoxicated — in truth, however, you may not have been intoxicated and the impact of that drink on your ability to perform your professional duties may have been insignificant.

It’s also worth noting that if you did not intentionally intake alcohol, then you may be able to avoid this coverage exclusion (i.e., you were served an alcoholic drink without realizing it).

Intentional Misconduct

A licensed professional who engages in intentional misconduct will not be covered by an E&O policy.

For example, suppose that you are a licensed architect and you are angry with a client.  As such, you design their home so that it is less “stable” than it should be.  A few years later, the home collapses during a storm, causing serious property damage.  If the client sues you for malpractice, your E&O insurer will not have to cover your losses, as your misconduct was intentional.

Circumventing this exclusion is a matter of establishing that your behavior was simply the result of negligence.  Unless the insurer can prove that you acted intentionally (i.e., that you acted with a motive), they will have to accept that you were simply negligent.

Navigating this “intent” gridlock can be quite challenging.  We encourage you to consult an experienced Miami insurance claim lawyer at Ver Ploeg & Marino, P.A. for guidance.

Illegal Activity

Illegal activity is excluded from coverage under E&O policies.  Illegal activity may not always be obvious, but generally speaking, whether you “lacked knowledge” about illegality will not matter.  If the conduct is illegal, the insurance carrier can avoid providing coverage.

For example, suppose that you are a physician and you violate the patient’s HIPPA privacy protections by sharing their embarrassing personal health information with friends in a social setting.  That conduct is illegal, and would almost certainly not be covered by your E&O policy should the patient decide to sue.

Administrative or Regulatory Investigation

Some E&O policies do not cover regulatory investigations conducted by licensing boards (or administrative investigations conducted by some other body, such as a hospital investigation into a physician’s conduct).  Whether the E&O policy will choose to cover these investigations depends on how they define the triggering event giving rise to coverage — some policies may require that the event be linked to a third-party lawsuit.

Conduct Not Linked to Profession

E&O policies only cover conduct that is linked to the “profession” of the policyholder.  Other negligent conduct is excluded from coverage.

For example, suppose that a licensed accountant spills liquid on the tile floor at the office, but does not clean it up or tell anyone about the spill.  If a few minutes later a co-worker slips and injuries themselves, they might decide to sue the accountant.  The E&O policy would not cover this negligence, however, as it has nothing to do with the accounting profession — it was an act of negligence that was entirely decoupled from their professional activities.

Employment-Related Practices

Employment-related practices tend to be excluded from coverage under E&O policies.

Successful licensed professionals may be involved in employment procedures, from hiring decisions to administrative matters relating to employees.  For example, a clinician who heads up a particular department in a hospital may be directly involved in hiring and promotional decisions.

If the professional is being sued for their employment-related practices (i.e., an employee is suing them for negligence in creating a hostile work environment), then that professional cannot look to their E&O policy for coverage.  The insurance carrier will likely consider that conduct excluded from coverage — they may point to a specific employment-related exclusion, or they may simply argue that the conduct is not applicable to the professional activities of the policyholder.

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