A federal court in South Carolina enforced a professional liability exclusion notwithstanding a claim of illusory coverage. State Farm Fire & Cas. Co. v. Morningstar Consultants, Inc., 2017 WL 2265919 (D. S.C. May 24, 2017).

An insurer disclaimed coverage under a CGL policy for damages arising out of the insured’s negligence in its rendering or failing to provide inspection services to building units of certain construction projects. The insured argued that the policies would be rendered meaningless if the professional liability exclusion applied. The court disagreed, concluding that (1) inspections were specifically listed as professional services for which coverage was not provided by the policy; (2) the parties intended to insure against ordinary, not professional liability (as evidenced by the low premium charged to the insured); and (3) nothing indicated that the insured’s sole business activity was inspection such that a professional liability exclusion precluding coverage for inspecting would eviscerate the coverage provided by the policy.