Countering Bodily Injury Exclusion Denial

Insurance carriers are like the Cheshire Cat, says attorney Adam K. Gallagher, of Becker & Poliakoff. They often confuse or annoy insureds with complex points, then vanish into thin air, leaving nothing but a grin and utter confusion behind. A good example of this is when an insurer denies coverage for a director’s and officer’s claim (which would otherwise be covered) citing the bodily injury exclusion. The risk is easily mitigated by ensuring that a business maintains broad form Commercial General Liability Policies or a Professional Services Policy with a bodily injury carve-out. Gallagher discusses some applicable case law. Search EDP, Inc. v. American Home Assur. Co. From the New Jersey Appellate Division has been cited in other jurisdictions. In that case, an employee sued Search EDP for failing to perform a background check on a computer programmer, who assaulted the employee. Search EDP’s Errors and Omissions insurer American Home denied coverage citing the bodily injury exclusion. The Search EDP court cited an older New Jersey case, stating: “The errors and omissions policy here will fairly fulfill its stated objective only by reading the bodily injury exclusion as excepting bodily injury claims alleged to have resulted from an act of professional wrongdoing.”