Business & Insurance Litigation Newsletter for Indiana

Professional Services Exclusion Applies to Third Party Claims

Many general liability policies contain an exclusion for liability due to rendering, or failure to render, a professional service. While few Indiana cases have dealt with the professional services exclusion, all have involved first party claims; or in other words, claims by someone to whom the insured had provided professional services. Thus, there remains the issue of whether the exclusion is applicable to claims brought by third parties. SeeErie Ins. Group v. Alliance Environmental, Inc., 921 F.Supp. 537, 541 (S.D.Ind. 1996), aff'd, 102 F.3d 889 (7th Cir. 1996). The Federal Southern District Court of Indiana, surmising what the Indiana Supreme Court would likely conclude, held that nothing in the language of the professional services exclusion before it nor, in the reasoning of prior Indiana case law, limits the exclusion to claims brought by clients of the professional (first party claims). Id. at 542 (examining policy which excluded coverage for liability for "damages due to any service of a professional nature").