The faulty workmanship is clarified as follows: “arising out of any actual or alleged cost to repair or replace faulty workmanship the Insured performs on any construction, erection, fabrication, installation, assembly, manufacture or remediation, including any materials, parts, or equipment furnished in connection therewith. This exclusion does not apply to: drilling, excavation, or other sampling or testing procedures or the supplying of furnishings as part of interior design services, necessary to perform professional services.”
The CNA professional liability policy provides coverage for liability you have due to negligently performed services. The faulty workmanship exclusion excludes coverage for construction-related activities. If you perform construction, erection, fabrication, installation, assembly, or remediation activities, then any claim that arises from these activities is excluded from coverage. The intent is to clarify that liability due to construction-related activities unrelated to professional services is not covered by the professional liability policy. We recognize, however, that there are certain types of activities that arise in the context of professional services that should not fall under the faulty workmanship exclusion.
What is the change?
You routinely perform certain activities that are necessary to perform your services. If the activity is related to the performance of professional services, then the faulty workmanship exclusion does not apply. For example, an interior design firm often supplies furnishings as part of their interior design services. Similarly, a geotechnical consultant has to drill or sample material to perform their professional services. The CNA policy recognizes that the line between professional services and construction may be blurred by necessity and in those instances, the exclusion should not apply.
In the 2020 policy, we updated the faulty workmanship exclusion to clarify that the exclusion does not apply to the activities that are necessary to perform professional services.
Why did we change it?
We changed this to align the policy language with our practice guidance. Forensic engineers, geotechnical engineers, testing labs, interior designers, and others were often concerned that the faulty workmanship exclusion would somehow impair policy coverage because they were engaged in activities related to their professional services. You can rest assured that the faulty workmanship exclusion does not apply to activities that you have to undertake to perform your professional services.
How does it benefit my practice?
The scope of coverage of the professional liability policy is clearer as it relates to activities necessary to perform your professional services.
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