Attorneys that are supposed to read contracts for a living. They tell their clients the importance to not only read the contract but to understand what it means. Rarely do attorneys follow their own advice; many times they end up with expensive lessons. Even more surprising is for an attorney to accept verbal assurances that they will have their attorney malpractice prior acts exposures covered in retirement for free. Never asking for the details or requirements needed to meet.
This is a recent call from an actual client that we have insured for many years:
“I have been verbally told for many years that I will have ‘free’ prior acts coverage once I retire. I am getting close to retirement and would like to get it in writing.”
“You have this information in writing. It is part of your attorney malpractice insurance policy. I will send you the pages of your policy that deal with retirement.”
E-mail to attorney:
“I have attached the policy pages from you Professional Solutions Policy that deal with an extended reporting period endorsement. The last page specifically addresses retirement. Please let me know if you have further questions.”
Pages from current Professional Solution policy that deal with Extended Reporting Periods:
“Section VIII. EXTENDED REPORTING PERIODS
If this Policy is cancelled by the Named Insured or by Us:
1. We will provide to the Named Insured an automatic, non-cancelable Extended
Reporting Period starting at the termination of the current Policy Period if the Named Insured has not obtained another Policy of lawyers professional liability insurance within sixty (60) days of the termination of this Policy. This Automatic Extended Reporting Period will terminate upon the earlier to occur of the Named Insured obtaining another Policy of lawyers professional liability insurance or the expiration of such sixty (60) day period.
2. We will provide the Named Insured the option to extend the insurance
afforded by this Policy by issuing an Extended Reporting Endorsement that will cover Claims first made and reported during the Extended Reporting Period for acts or omissions which occurred prior to the end of the Policy Period and are otherwise covered by the Policy. The additional premium for the Extended Reporting Period is based on the rates and rules in effect on the date this endorsement is added and shall be for:
a. One (1) year at 100% of annual premium
b. Two (2) years at 135% of annual premium
c. Three (3) years at 150% of annual premium
d. Five (5) years at 185% of annual premium
e. Seven (7) years at 225% of annual premium
f. Unlimited years at 275% of annual premium
a. The Policy was cancelled or non-renewed for reasons other than non-payment
b. Any deductible amounts due the Company have been paid when due;
c. The Insured(s) have complied with all the terms and conditions of the Policy;
d. The Named Insured made no material misrepresentation in the application, any supplements, attachments and replies to underwriter inquiries;
e. The Insured’s license to practice law has not been suspended, surrendered or revoked; and
f. You must exercise such right by providing written notice to Us, accompanied by the full additional premium due, within sixty (60) days after the termination of the Policy.
3. Death or Permanent Disability Extended Reporting Period:
Upon death or total and permanent disability of the Insured, such Insured will be entitled to an Extended Reporting Endorsement as set forth below at no additional charge provided We are notified within sixty (60) days of the expiration date of the current Policy Period:
In the event of the Insured’s death, We must receive from the heirs, executors
or administrators satisfactory written evidence of the Insured’s death. An unlimited Extended Reporting Period will be issued to the estate, heirs, executors and administrators of the Insured.
b. Total and Permanent Disability:
In the event the Insured becomes Totally and Permanently Disabled, the Insured must provide Us with written proof of total and permanent disability, including the date the disability began, certified by the Insured’s physician. We retain the right to require the Insured to submit to medical examinations by physicians designated by us. The Extended Reporting Period provided for total and permanent disability lasts until the Insured is no longer Totally and Permanently Disabled or if the total and permanent disability be terminated by the death of the Insured, then the Extended Reporting Period endorsement may be obtained in compliance with Section VIII., subparagraph 3a.
4. Retirement from the Practice of Law
a. If an Insured retires, permanently and totally, from the private practice of law during the current Policy Period and has been continuously insured by Us for at least three (3) consecutive years and provides written notice to Us of such
retirement within sixty (60) days of the expiration of the current Policy Period, then the Insured will be entitled to an unlimited Extended Reporting Period at no additional charge.
b. It is understood and agreed that any Extended Reporting Period will not be construed to be a new Policy, and any Claim submitted during such period will otherwise be governed by this Policy.”
While an insurance agent or another person can tell someone that there is a ‘free’ retirement tail. A well trained insurance agent will not interpret coverage. A few minutes of reading tells the attorney exactly what that means and what the requirements are to obtain the coverage that (s)he is looking for. Making an assumption as to what a retirement tail is can make an “ass out of you and me”. In this case the assumption was correct.
It is important to note that no two attorney malpractice policies are the same. There is no standard language. Coverages, terms and conditions while similar in many policies can differ dramatically from one policy to the next. Not all attorney malpractice policies offer a ‘free’ retirement ERP.