First, understand that all construction-related professional
liability policies vary. Second, all must be read carefully.
Don't ever allow yourself to be surprised by lapses failing to
cover costly problems related to mold or other bacterial matter
like Legionella. Third,
expanded policies that include this form of insurance are
simpler to purchase than you think.
Mold Coverage
Professional liability policies provide coverage for
damages that result from the
rendering of acts, errors, and/or omissions in
professional services or
should have been rendered by or on behalf of the named insured
(the design or construction professional). However, the best
explanation needs to begin with the proper definition of
damages.
Unlike a commercial general liability (CGL) policy, which
provides insurance for mainly bodily injury and property damage,
the professional liability policy pays for third-party damages,
generally speaking, and goes beyond bodily injury or property
damage to include any
third-party damages that are not excluded. Using a typical or
generic definition, damages means "the monetary amounts for
which the Insured is held legally liable, including judgments,
awards, or settlements, and related claims expense." Nowhere in
that definition does it refer to any specific damages like under
the CGL policy.
Therefore, if mold, microbial matter, or any other pollutant
results from an error in professional services, the resulting
liability should be covered under the typical professional
liability policy, provided it is not specifically excluded. Some
policies clearly state an exclusion outright in the exclusion
section of the policy. Others are attached via endorsement or
include exclusions via definition. Nonetheless, all policies
should be carefully reviewed to ensure none exist.
Now, let's consider one last piece to the puzzle. In this
context, the definition of professional services needs to be
broad enough to cover the activities performed by the design or
construction professional as well as the services performed on
behalf of the named insured. If not, we just wasted the last few
minutes discussing the definition of damages. Because if the
services are not covered, neither are the resulting damages.
Although basic, this is a consideration that is often overlooked
and many times impacts coverage.
Conclusion
So, the short answer to the question is
yes. The typical
construction-related professional liability policy does provide
coverage for claims for third-party damages involving mold,
microbial matter, or any other pollutant as long as the damage
arises out of negligent acts, errors, and omissions in
professional services performed by or on behalf of the insured.
But again, this is only true if the policy does not include any
additional exclusionary language and the negligence is proven or
at least alleged. But this is an issue for any claim situation.