Standard of Care

There are four elements that a claimant must assert in order to state a claim for professional negligence against a design professional:

• Duty – there must be a duty owed by the design professional to the party bringing a claim;
• Breach – there must be a breach of the applicable standard of care by the design professional;
• Damages – there must be actual damages; and
• Causation – there must be a causal connection between the design professional’s failure to perform in accordance with the standard of care and the actual damages sustained. In other words, the damages must have occurred as a result of the design professional’s breach of the standard of care.

Professional liability insurance policies presume that the insured’s professional services will be judged based upon the common law standard of care. The common law standard of care exists by operation of law, independently from any contract, based upon the relationship between a design professional and their client. Most professional liability policies exclude from coverage any liability that an insured assumes under a contract that would not exist in the absence of such contract (contractual liability exclusion). Also, most professional liability policies exclude any liability arising from any express warranty or guarantee unless the insured’s liability arises as a result of a breach of professional duty and would have existed absent such express warranty or guarantee (express warranty/guarantee exclusion).

Given the above, design professionals should be careful when negotiating professional services agreements to ensure that they are not agreeing, by contract, to perform to a higher level than the common law standard of care. Examples of a higher standard of care include the following: 1) committing to exercise the “highest” level of care, 2) acquiescing to deliver instruments of service “free of defects or errors”, or 3) stating that, during construction administration, the design professional will ensure that the contractor meets all details of the plans and specifications.

Agreeing to an elevated standard of care may result in your professional liability insurance carrier denying coverage based on the contractual liability exclusion and the express warranty/guarantee exclusion. Moreover, a heightened standard of care could make you more susceptible to an uninsurable breach of contract claim. Courts have held that a design professional who binds by contract to a higher standard of care will be held to such elevated standard. In CH2M Hill Southeast, Inc. v. Pinellas County, 698 So.2d 1238, 1240 (Fla. 2d DCA 1997), the court held that if a design professional agrees by contract “to perform duties beyond those required by ordinary standards of care, the quality of that performance must comport with the contractual terms.”

By agreeing to a “highest” standard of care in a professional services contract, you may subject yourself to liability for breach of contract (an uninsurable loss) even though you were not negligent. For example, if, in a lawsuit brought by your client, you prevail on a negligence count but lose on a breach of contract count, the professional liability insurer may not cover the loss on the grounds that it was specifically excluded from coverage.