What does it mean that my defense costs are outside the limit of liability?
You purchase a lawyers’ professional liability insurance policy in the event of a claim being brought against you based on an act or omission in your rendering or failing to render legal services for others. You carefully elect your limit of liability with the understanding that this amount will be available to cover all damages covered by your policy. However, if your defense costs are part of (or “inside”) your limit of liability, it means that each dollar spent on claim expenses, such as the cost of defending your claim, is one less dollar available to pay for actual damages.
As you know, claim expense costs can be extremely expensive. When those costs exhaust your available limit of liability, your carrier’s obligation to investigate, defend and cover your claim is terminated and you end up paying settlements, judgments and/or costs out of your own pocket.
If preserving your available limit of liability is important to you, be sure to consider a policy that provides for defense costs to be paid all, or in part, outside the limit of liability.
What is defense cost inside vs. outside?
If your defense costs are inside the limits of liability, any lawyer fees, investigation, defense, and appeal expenses may erode your limits of liability. Example, if all these expenses add up to $50,000 and you have a $100,000 per occurrence limit on your policy, you only have $50,000 left to pay a judgment or settlement. If your defense costs are outside your limits of liability, the expenses mentioned prior will not reduce your liability limits. There are other variations of defense costs options and the firm’s deductible may count as part of the per claim limit.
What are my extended reporting period options?
Understanding your extended reporting period or “tail” coverage options is critical to your maintaining sufficient, continuous insurance coverage. A standard professional liability claims made and reported policy affords you coverage for claims that occur and are reported to your carrier during the policy period.
Once you cancel or non-renew your policy, you may no longer be covered for any claims that were not reported to your carrier, even if the claim occurred during the policy period. An extended reporting period provides a specific, additional length of time in which reported claims will be covered, even if your policy is no longer in effect.
Extended reporting period options can be available in a variety of ways: from an automatic extended reporting period that automatically offers you an extended period of time (such as 30 days) after the termination of your policy period to report a claim first made against you during the policy period; to specific extended reporting periods that can be priced accordingly and range anywhere from 1 year to unlimited; to a non-practicing tail that provides a non-practicing or retired attorney with an unlimited extended reporting period for reporting all claims that occurred during the policy period; to a disability extended reporting period that is available, often at no additional premium, in the event that you become totally or permanently disabled. C&R Insurance Services can provide you with detailed information on all your extended reporting period options.
What options are available to part-time attorneys and of-counsel?
Some programs like FirmPro offer a reduced premium for part-time attorneys or of-counsel. If this benefit matters to your practice, ask us about whether this is an option for your firm.
What should I know about prior acts coverage and my retroactive date?
Why is this important? Most claims-made policies afford full prior acts coverage, meaning even your actions that occurred during a different policy period will be covered if the claim arising from those actions is reported during the current policy period. Therefore, providing a retroactive date informs a carrier offering full prior acts coverage exactly how far back a potential claim may have arisen. Prior Acts coverage is often a complicated, yet extremely important, aspect of your professional liability policy and should be fully understood. C&R is available to explain this in more detail should you have any questions.
What you are being requested to provide is the date when you first began receiving continuous lawyers’ professional liability insurance coverage. For example, if your first lawyers’ professional liability policy had an effective date of January 1, 2000, and you changed carriers and policies every year since then but always maintained continuous coverage, your retroactive date would be January 1, 2000.
What is a Claims-made policy?
A claims-made policy requires that all claims to be considered for coverage must be made against the insured and reported to the insurer during the policy period. Insureds who do not renew their policies will not have coverage for losses that occur during the policy period but are not reported until after the expiration of the policy.
What risk management resources will be provided to our firm?
Please refer to our safety center.
(PA attorneys only) How is a PA application for Lawyers’ Professional Liability Insurance evaluated?
There are many factors used to make an evaluation. Factors may include a law firm’s areas of practice, loss history, prior acts, and territory.
You may be eligible for a premium discount based upon your insurance score. An insurance score will not result in a premium increase. The insurance score is also never the basis on which this company will accept or reject an application for an insurance policy.
What is the definition of loss free?
If you or your firm has not had a claim or incident reported against you in the past 5 years.
Do you have to have a broker to access coverage through C&R?
No, you can access us directly. Please go to “Get a Quote”