Lawyers Mutual offers a claims-made and reported policy, which is now the most common policy form for professional liability insurance. This policy requires that a claim be first made against the insured attorney and reported to the insurance company within the policy period. With a claims-made and reported policy, two conditions must be met to trigger coverage. First, the claim must be made and reported to Lawyers Mutual during the term that the policy is in effect. Second, the act, error, or omission giving rise to the claim must have occurred on or after the policy’s retroactive date. Malpractice committed prior to the retroactive date is not covered. Lawyers Mutual often offers policies with no retroactive date, which means that we offer coverage for any prior acts, errors, or omissions that result in a claim first received and reported during a policy period.
The Declarations Page identifies the named policyholders, the amount of coverage purchased by the Firm, the deductible, the policy term, and any special forms, such as endorsements.
The amount of coverage selected by an attorney is subject to two policy limits:
A per claim or occurrence limit, and
An annual aggregate limit for all claims made during the policy period. For example, the policy may specify the limits to be $500,000 per claim and $1,000,000 as the annual aggregate for all claims (referred to as $500,000/$1,000,000). The per claim limit, expressed as the occurrence limit, means that the company will pay no more than that sum as the total amount for all claims arising out of the same act or omission (or related acts or omissions) regardless of the number of claimants. The “aggregate” limit is defined as the total limit of a company’s liability for all claims made within the term of the policy, plus any additional time provided for in an extended reporting endorsement. The limits apply to cost of defense as well as indemnity. For example, if a policyholder has a $100,000 policy, a claim that results in $20,000 in defense costs above the policy deductible, and a $90,000 judgment, the insured will owe the $10,000 difference in the cost of defense and indemnity and the $100,000 policy limits.
If a lawyer leaves your firm during the policy period, we require you to notify us in writing of the date of the attorney’s departure. Coverage under your policy will not be provided to the departed lawyer for professional services rendered after the date of departure from your firm. If you add a new associate or partner during the policy period, we also require you to notify us in writing of the date on which the lawyer joined your firm. This is the date coverage will begin for your new hire. New partners and associates joining your firm receive immediate coverage at no extra charge during the current policy period. However, you must decide whether your policy will cover the prior acts of your new associate or partner. If you do not wish to provide prior acts coverage, an endorsement must be added to your policy; otherwise, your deductible may be at risk for an act of your new hire that predated the date of hiring.
Lawyers choosing either to stop practicing law or to retire may continue to be insured by purchasing an Extended Claims Reporting Period Endorsement, more commonly referred to as a “tail policy.” Such an endorsement extends the period of time allowed for the reporting of claims based on incidents that occurred prior to the expiration date of your policy. Because the “tail policy” is simply an endorsement to your current policy, the policy terms, conditions and liability limits remain the same. It is important to understand that the endorsement does not provide coverage for your current acts. It only extends the time period for the reporting of claims based on your acts prior to your policy’s termination date. Lawyers Mutual offers several “tail” options.