Fee Disputes Exclusion — an exclusion found within a significant minority of professional liability
insurance policies that precludes coverage for claims made against
professionals arising from a disagreement about the fees charged by such
professionals. The typical sequence of events that produce these types of
claims is (1) a client disputes the amount charged by a professional after
receiving his or her bill, agreeing to pay only a part of the bill (or perhaps
none of it); (2) the professional brings a collection action against the client
for the unpaid balance of the bill; and (3) the client responds to the
collection action by filing a claim against the professional, alleging that the
professional negligently performed the services that are the subject of the
dispute. The rationale for excluding claims involving a fee dispute is that
insurers consider such matters to be business risks, rather than risks
originating from the negligent performance of professional services. Another
reason for the exclusion is that insurers view these disputes as largely
preventable, provided the professional clearly explains his or her fee
structure and obtains the client's agreement to those fees, in advance of
actually performing professional services.