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Question from Attorney:

I am still looking at alternatives for renewing my attorney malpractice coverage and cannot get firm terms until I get Insurance Carrier Loss runs from my incumbent carrier.  If I am a “few” days late renewing coverage is that going to be a problem?  There is a “grace” period anyway, right?

Response:

Letting your Lawyers Professional Liability Insurance Lapse can have consequences.  There is no grace period.  Some of the major issues are:

1.       If firm has a claim made against the firm after the coverage has lapsed, your incumbent insurance carrier could withdraw terms.  The other malpractice carriers that you have been shopping with may withdraw or alter terms.

2.       Claim could be denied.  This would leave firm with possibly only one choice to protect their past acts and have the claim covered.  That would be to purchase a firm ERP (Extended Reporting Period Endorsement) if possible.  This could be very expensive, but much less than paying a claim out of pocket.

3.       If you are waiting on loss runs from your incumbent carrier, for another carrier to “firm” up terms, best know exactly what is on the insurance carrier loss runs.  A surprise on the loss runs could cause your new carrier to withdraw terms.

4.       If after going through all this you decide that your best course of action is to renew with the incumbent carrier, remember there is no grace period.  Incumbent malpractice carrier underwriter might not want to bind as their terms have expired.  This leaves firm with no good alternatives to protect past acts. Again may have to rely on purchasing an ERP and get a new policy written with a gap in coverage without prior acts coverage.

Have all of these alternatives happened.  The answer is yes.  Procrastination on deciding to renew coverage can have ramifications.   Trying to save money at the last minute may cost much more than anticipated.  If firm is going to shop Lawyers Professional Liability Insurance Renewal Terms make sure the alternative coverage is bound prior to the expiration of current coverage.

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