Negligent Inspection Not Excluded.


In connection with the sale of a home, Isle of Palms issued a termite inspection letter stating that there was no visible evidence of infestation in the home. The purchaser of the home brought an action against Isle of Palms, claiming there was in fact infestation at the time of the report and alleged that Isle of Palms conducted its inspection in a negligent manner.


The purchaser also included allegations of fraud, breach of contract, unfair trade practices, conspiracy, negligent misrepresentation, and breach of warranty on the part of Isle of Palms in connection with its failure to properly prepare the report.


Monticello issued a general liability policy [the edition cannot be determined] to Isle of Palms.  Isle of Palms filed a declaratory judgment action, arguing that under the policy, Monticello was obligated to defend and indemnify Isle of Palms.  The trial court held that Monticello was obligated to indemnify and defend Isle of Palms.


On appeal, Monticello contended that the professional liability exclusion was applicable and defeated any claim of coverage by Isle of Palms.  The court agreed with the trial court in finding that the professional liability exclusion was not part of the policy because it was not identified on the declarations page and was not properly brought to the attention of Isle of Palms.


The appellate court stated that Monticello apparently conceded that the policy would cover damage caused by actual exterminating or spraying by Isle of Palms, attempting to characterize inspecting homes and issuing termite letters as professional services while contending actual exterminating was not a professional service. The court found no basis for such an exclusion.


To the extent that these services are “professional” services, the professional liability exclusion would preclude coverage for claims arising out of the rendering of any of the services offered by Isle of Palms.   Because it found that giving effect to the professional liability exclusion would render the policy virtually meaningless, the court refused to interpret the exclusion so as to bar claims for property damage caused by Isle of Palms’ negligence in performing its exterminating services and affirmed the order of the trial court.


Isle of Palms Pest Control Co. v Monticello Insurance Co., 459 SE2d 318 (SC App 1995).