Understanding Claims Made Legal Malpractice Insurance
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We often find that even lawyers who've been at it for a long time are confused about how claims made insurance policies work. It is essential, however, for the health of your practice to understand your claims made policy and how retroactive dates work.
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Understanding Claims Made Legal Malpractice Insurance
- 1. UNDERSTANDING “CLAIMS MADE” LIABILITY INSURANCE What every attorney needs to know
- 2. Key Terms Claims Made Occurrence Coverage Retroactive Date Nielsen & Geenty www.CaliforniaLegalInsurance.com
- 3. Claims Made vs. Occurrence Examples Most auto or homeowners insurance is “occurrence” coverage, so the policy covers you when you have an accident during the policy period. Legal Liability is almost always “claims made” coverage, so you are covered for past acts where the claim for damages happens during the policy period, regardless of when the act itself happened. Occurence: Covers event that occurs during policy period Claims Made: Covers past work where claim is made during policy period. Nielsen & Geenty www.CaliforniaLegalInsurance.com
- 4. Retroactive Date Definition Retroactive Date, n. How far back your coverage extends. Goes back to the original retroactive date on your original policy if you maintain continuous coverage. Can reset if you let coverage lapse. May be expensive, sometimes impossible, to re-establish original retroactive date if it resets. Nielsen & Geenty www.CaliforniaLegalInsurance.com
- 5. Retroactive Date Example Policy Date: 1 January to 31 December 2013. Retroactive Date: 2 March 1991 (when you bought your original policy). Scenario 1: Claim made on 2 March 2013 alleging error made on contract from 13 April 2002. Covered! Scenario 2: Claim made on 2 March 2013 alleging error on contract from 3 February 1991. Not covered! Nielsen & Geenty www.CaliforniaLegalInsurance.com
- 6. Avoid these mistakes to make sure you don’t find yourself without coverage. Making Sure You’re Covered Nielsen & Geenty www.CaliforniaLegalInsurance.com
- 7. Notifying Your Carrier A claims made policy requires you to notify your carrier of a claim “as soon as practicable” When in doubt, notify. Fear of a premium hike prevents some people from notifying their carrier until it’s too late. You could be denied coverage for this. Be prompt. If you wait and it turns out that you knew of a possible claim, but didn’t mention it at the time of policy renewal, it may not be covered by your current policy. Nielsen & Geenty www.CaliforniaLegalInsurance.com
- 8. What Constitutes a Claim? No need to notify: A client calls and says, “I’m a little disappointed by the outcome, but I guess that’s life.” Best to notify: A client calls and says, “If you had filed the motion on time, I wouldn’t be in this situation. You’ll be hearing from my lawyer.” Judgment Call: A client calls and says, “It’s your fault we lost. If you had handled my case correctly, I’d be retired to the tropics right now!” Nielsen & Geenty www.CaliforniaLegalInsurance.com
- 9. Who Decides? Ultimately, the court decides. If the claimant says you were notified on April 2 and the court agrees, your carrier can argue that you did not notify in a timely manner and you could be uncovered! Nielsen & Geenty www.CaliforniaLegalInsurance.com
- 10. FIND OUT MORE AT http://californialegalinsurance.com Nielsen & Geenty Insurance Services, Cedar Ridge, CA.