Professional Services Exclusion and Applicability to CGL Coverage

The United States Court of Appeals, Fifth Circuit, took up an appeal centering on the question of the applicability of a professional services exclusion in an CGL policy. This case is Admiral Insurance Company v. Ford, 2010 WL 2026699 (C.A.5).

Ford purchased two insurance policies from Admiral Insurance Company. The CGL policy provided occurrence-based coverage with a $1 million limit per occurrence. The professional liability policy provided claims-made coverage for oil and gas consultant operations with a $50,000 limit per claim. Ford was hired by Exco Resources to create a drilling plan for an oil well and to consult and assist in the drilling of the well. During the drilling, the well had a blowout and Exco sued Ford. Ford's insurer paid the $50,000 professional liability limit but then filed a declaratory judgment action seeking a declaration that it owed no coverage to Ford under the CGL form because of a professional services exclusion. The trial court ruled in favor of Ford and found the professional services exclusion was illusory because it defined professional services as “all operations of the insured”. This appeal followed.