An exclusion commonly endorsed onto general liability policies and found within
directors and officers (D&O) liability insurance policies. As a
modification of commercial general liability (CGL) policies, the exclusion
serves to segregate general liability from professional (errors and omissions
(E&O)) exposures, leaving only the former insured. (For example, it would
not interfere with coverage of a physician's premises liability if someone
falls and is injured while in the office, but it would exclude any liability
arising from the physician's providing of medical care.)
As part of a D&O policy, the intent of the exclusion is similar: to
preclude coverage of traditional professional services that are sometimes
performed by individuals covered by the D&O policy but should be separately
insured. The exclusion would apply in the following situation. Assume that a
corporation's chief counsel is an officer of the corporation and therefore
covered by the D&O policy. The chief counsel reviews a merger and
acquisition agreement with a competitor firm, concluding that the merger does
not violate antitrust laws. But 3 months later, the antitrust division of the
U.S. Department of Justice challenges the merger, which, after protracted
litigation, does not take place. The competitor firm then sues the chief
counsel for rendering an erroneous legal opinion that cost the competitor
millions of dollars in legal and consulting fees. The professional services
exclusion would preclude coverage for the chief counsel in this situation
because the services provided were those of a lawyer rather than those of a
traditional director or officer. Coverage for this exposure is available under
a lawyers professional liability policy or under an employed lawyers
professional liability policy.