How To Easily Plug All Fatal Gaps In Your Lawyers Professional Liability Insurance And Leverage The Multi-Billion Dollar Insurance Industry To Your Advantage
by Michael P. Carroll, Insuring Lawyer
A shared in last month’s issue am continuing with examples of how you can make certain that you are properly protected on your Lawyers Professional Liability.
Why, you may ask? That is because too often the enemy of being great is simply being good versus being awful. In fact, if something is perceived to be good or good enough then it is often deemed acceptable. Yet if you’re reading this article, my feeling is that you are a person that does not settle for the status quo.
See in our litigious society, too many excellent law firms have had allegations of malpractice made against them. Lawyers Professional Liability insurance policy form language is critically important. It can mean the difference between whether your insurance company will pay claims that may result.
You need to know that not all Lawyers Professional Liability (LPL) insurance policies are created equally, and even if the policy under consideration does not contain the policy language and coverage that you desire, you can negotiate the coverage that you need, sometimes at little to even no additional cost.
Continuing on again from last month’s issue as follows are so more excellent example of what to look for to make certain that you are properly protected on your Lawyers Professional Liability.
Professional Services— Beyond Being a “Lawyer”
Most LPL policies very expansively define “covered professional services” under the policies. These covered professional services typically include services rendered as a lawyer, arbitrator, mediator, notary public, executor, or trustee, for example. However, sometimes attorneys in your firm perform professional services on behalf of clients that do not meet these definitions.
Examples include acting in the capacity of a lobbyist, a member of the board of a bar association, an author of legal articles, or a speaker at legal conferences. Less common additions to a definition of covered professional services under a policy include services rendered as an expert witness or claims adjustment services.
If one of your attorneys commits malpractice in one of these capacities, and it is not included in your policy’s definition of covered professional services, then the insurer might have the right to deny the claim.
It is often difficult to determine when an attorney takes his or her “lawyer hat” off and puts on his or her “lobbyist hat” instead. Nonetheless, to avoid ambiguity, it is best to evaluate your firm’s professional services thoroughly, and make sure that your policy provides the coverage that you need.
Most insurers are able to expand the definition of covered professional services through the use of an optional endorsement, and usually without charging an additional premium. However, you will not get this coverage unless you ask for it!
Also, as a side note. Your insurer will not add professional services that are not typically performed by law firms. For instance, they will not add “accounting services” to its LPL policy definition of covered professional services. In that example, you would need to purchase a separate “accountants professional liability” policy to cover that exposure.
Exclusions – They Giveth And They Taketh Away
LPL insurance policies are written to cover pretty much anything that a lawyer does in his or her professional capacity for his or her clients, unless otherwise excluded under the policy.
Therefore, reviewing the exclu¬sions in an LPL policy is critically important. Once again, it would be incorrect to assume that an insurers exclusions are not negotiable. Insurers often do have optional endorsements that modify or even elimi¬nate exclusions that are in a policy. How¬ever, it is usually much more difficult to have these taken out.
First, an insurer will not eliminate exclusions that are considered essential to the nature of the LPL policy. For example, an insurer will not agree to remove the “bodily injury” exclusion because that would have the effect of converting the LPL policy into a general liability policy.
An insurer also would not agree to eliminate the “intentional bad acts” exclusion because a properly drafted insurance policy would not cover intentionally fraudulent or criminal behavior. However, if there is a particular exclusion that would provide incomplete coverage to your law firm, then it would be wise to at least ask your insurer if it could remove the exclusion.
For example, some LPL policies exclude any securities work performed by a law firm because of the severity potential of such claims. If your firm does not perform traditional securities work by representing public companies in connection with their reporting obligations to the SEC, or engaging in private placements or municipal bond work, then you may think that such an exclusion is not meaningful.
However, some securities exclusions are written so broadly that even a simple incorporation of your client’s business could be an excluded professional service under your policy. Therefore, it is very wise to evaluate all exclusions in your policy in light of your firm’s particular practice.
Manuscript Endorsements— The Sky Is Indeed the Limit
Most of the optional endorsements dis¬cussed so far have been filed and approved by your states Department of Insurance. However, many states allow insurers to use “manuscript endorsements” to craft insurance policy language to meet the unique needs of individual law firms.
If your state allows insurers to use manuscript endorsements, then you can negotiate the exact language of each word of the endorsement with your insurer. As the endorsement name implies, the endorsement language is specifically written for you in a manner that is acceptable to both your law firm and your insurer.
These endorsements typically contain similar language as other optional endorsements, deleting entire sections of the policy and replacing them with language acceptable to both parties. If the change to the coverage policy form that your firm requests is covered under an already existing optional endorsement that has been approved by your states Department of Insurance, then your insurer will use that language.
However, if the change to the coverage is out of the ordinary, then a “manuscript” endorsement is the way to go. Manuscript endorsements are not commonly used.
In addition, multiple authorizing persons working for an insurer usually needs to approve them, including underwriters and claims personnel. As such, it may take some time to negotiate a “manuscript” endorsement with an insurer.
Therefore, it is certainly your best bet to begin your reviewing your insurance policies about 90 days prior to your renewal to build in enough time to negotiate the coverage that you need.
The Truth – Size Matters
Your success in negotiating the exact coverage that you need is often dictated by the size of your law firm. Insurers are more willing to consider changes to their standard policy form language if a law firm is considered large enough.
Because optional endorsements are out of the normal workflow, some insurers will deny a request to add an optional endorsement because they simply don’t want to take the time to do it given the premium that the carrier will earn. However, don’t let this tendency dissuade you from asking for what you want.
The market for LPL insurance is usually very competitive. It is your firm’s financial health and reputation that is on the line. A good LPL insurance policy should not be viewed as “good enough.” It is worth your time to read the policy, ask for what you want, and realize the coverage that you need.
An expert LPL insurance broker is your advocate in this process and can greatly aid you in this process. So be as detailed as possible to allow the expert LPL insurance broker help craft coverage enhancements that you need and want as ultimately, it is your firm’s responsibility to make sure that you have great coverage in place.
In next month’s issue will continue to share with you excellent Lawyers Professional Liability “insurance insider secrets guaranteed to plug all fatal gaps in your Lawyers Professional Liability insurance protection.”
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