This is not an all-inclusive list. It is a start for a law firm or accounting firm that is purchasing malpractice insurance for the 1st time, evaluating current coverage, or contemplating switching Professional Liability Insurance Carriers. People new to Malpractice Insurance coverage are very surprised to learn that there is no standard policy form. Every Insurance carrier has a different policy form and definitions from one carrier to another are not the same. Just because one policy is cheaper than another, may not mean that it is a better bargain or has the same coverages. The devil is truly in the details when it comes to procuring malpractice insurance coverage.
Some of the things to consider are:
1. How long has the agent been in business and does the agent specialize in claims made coverage? Specifically does the agent know Attorney Malpractice or Accountant Malpractice Insurance and how long has the agent written these coverages?
2. Does the agency have a variety of Malpractice Insurance carriers that it has access to?
3. What is the AM Best Rating and size of the Malpractice Insurance carrier?
4. How long has the Malpractice Insurance carrier been writing professional liability insurance?
5. Does the Malpractice Insurance Carrier’s claims department specialize in Attorney Malpractice and Accountant Malpractice Insurance?
6. Does the Malpractice Insurance Carrier have empaneled counsel in the state?
7. Does the carrier offer risk management services?
8. Is the carrier an admitted or a non-admitted Insurance carrier?
9. Is the policy assessable? Some carriers have the right to assess additional premiums if the losses exceed a certain threshold for the carrier. This can be a concern with some Risk Retention Groups and Mutual Insurance Companies
10. If you currently have coverage, make sure that:
a. The effective date of new coverage matches your expiration date of old coverage
b. Your prior acts date(s) are the same or equivalent
c. The liability insurance limits are the same or equivalent
d. If you have Claims Expenses Outside the limits (CEOL) does the new quote offer
e. If you have 1st dollar defense, does new quote offer or have
f. If current policy has aggregate deductible does new quote offer
g. If current policy coverage an “owned” Title Agency endorsement does new quote offer
11. Are there any exclusions for the Professional Liability Insurance? Note policy exclusions may be in the policy language or a specific endorsement may exclude coverage. As the firm has specific knowledge that the agent may not process about the firm, it is important that the firm thoroughly review the policy and all policy endorsements. Some of the more common exclusions may be:
a. Officer and directorship exclusions
b. Closely held entities or joint ventures may be excluded
c. Securities or Intellectual Property work may be excluded
d. Services as a fiduciary under the Employee Retirement Income Security Act or 1974 (ERISA) may be excluded
e. RICO Claims may be excluded
f. Activities as a public official may be included, excluded or not included
g. Employment Practices may be included, excluded or not included
h. Cyber Liability Coverage may be included ,excluded or not included
i. Coverage for loss of funds may be included, excluded or not included
12. In the insuring agreement check:
a. Is the policy a duty to defend or reimbursement policy?
b. Is there a “consent to settle clause”? If so, is there any penalty for withholding consent (Hammer Clause)?
c. Are there additional coverages included, either in the insuring agreement or a separate additional coverage section such as disciplinary coverage, regulatory agencies inquiries or loss of earnings payment
13. Does the “Named insured” on the policy include all parties that are intended to be insured by this coverage, either by endorsement or on the declarations page?
14. Does the Definition of who is insured cover predecessor firms, past employees, partners and associates either in the body of the policy or by endorsement?
15. Does the definition of what services are covered include all services provided by the firm?
16. Are all locations listed on the policy?
17. Is work done outside the firm covered? IE pro bono work.
18. Are there an specific exclusion endorsements that list specific claims, states, entities, or persons?
19. Are there any clauses as to who selects defense counsel?
20. What are the arbitration clauses in the policy, if any?
21. What are the reporting requirements and how is a claim triggered under the policy?
22. What are the requirements for reporting changes to the firm?
23. Is the policy a “One Way” or “Two Way” Extended Reporting Period (ERP or Tail) option? In other words if the insured cancels coverage or chooses not to renew, does the insured still have the right to purchase Tail coverage?
24. Is the policy an “excess” policy or “primary” insurance coverage policy?
25. Is there” Innocent Insured” coverage?