The Evolution Of Coverage For Non-Traditional Professions

As the insurance industry expands its product offerings to provide coverage for a growing list of non-traditional "professional" services, insurers, policyholders and the courts are faced with the task of defining the specific scope of the risks covered.

Unlike general liability policies or auto policies, professional liability policies are designed to cover the insured's liability for purely economic loss. The intent, however, is not to cover all financial obligations that the professional may incur, but limit coverage to those liabilities that are somehow unique or inherent in the particular profession. For example, a legal malpractice policy would cover the liability for a lawyer's failure to file a complaint within the statute of limitations, but it would not cover errors in providing the client investment advice. In the context of a "traditional" profession—such as law, medicine, engineering or accountancy—this distinction is fairly easily drawn. Courts impose specific duties on these professionals separate and apart from any contractual relationship, and society has a general agreement of what is and is not the job of these professionals.

Non-traditional professions, on the other hand, are not so well defined. In large part, this is the result of the rapid development of the service economy. More and more, consumers and businesses need services, as opposed to goods, and individuals and corporations are making a living through intellectual, as opposed to physical, endeavors. For example, the demand for software applications has driven the growth of the technology industry. The increasing complexity of corporations' human resources obligations has spurred the development of the staffing industry and other outsourcing providers. The availability of massive amounts of consumer data has led to the emergence of industries focused on mining and using this data, such as consumer reporting agencies and analytics companies. And, even the increasing complexity of traditional professions fuels the growth of appurtenant...

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