Essential Prior Acts Insurance Terms Every Lawyer Needs to Know
When it comes to Lawyers Professional Liability Insurance (LPL), understanding prior acts coverage is critical. Whether you’re a solo practitioner or part of a large firm, a single misunderstanding of this concept could leave your practice exposed to uninsured claims. In this blog, we break down the key terms every attorney must understand to protect their career and reputation.
What Are “Prior Acts”?
In LPL, prior acts refer to legal services performed before the start date of your current malpractice policy. Whether or not those services are covered depends on your retroactive date and your policy’s structure. Not all prior acts are created equal and not all are covered.
Essential Terms to Know
1. Prior Acts Coverage-Coverage for legal services provided before the current policy period is subject to the policy’s retroactive date and terms. This coverage ensures you’re protected for past work, even if claims arise years later.
2. Retroactive Date-This is the cutoff date for covered legal work. Any services performed before this date are not covered even if the claim is made while the policy is active. It’s arguably the most important date on your policy. Always check your retroactive date when switching insurers or renewing your policy.
3. Full Prior Acts-A policy with no retroactive date restriction covers all past legal services, as long as the claim is made during the policy period and you’ve had continuous claims-made coverage.
4. Prior Acts with a Specific Date-Covers legal work only from a specific retroactive date forward. Acts performed before this date are excluded.
5. No Prior Acts / Retro Inception-Coverage only applies to work done after the policy’s effective date. Past services are completely uncovered. Common for new law firms or a new policy after a coverage lapse.
6. Claims-Made Policy-LPL is written on a claims-made basis meaning coverage applies only to claims:
• Made during the policy period, and
• For acts after the retroactive date.
If your policy expires and you don’t have tail coverage, you lose coverage, even for past work.
7. Continuous Claims-Made Coverage Date-This refers to the start of your uninterrupted claims-made coverage history. Maintaining continuous claims-made coverage is critical for preserving your prior acts coverage. The biggest mistake lawyers make is assuming that renewing or switching policies automatically protects them for past work. In reality, coverage is tied to the retroactive date. A single gap in coverage could eliminate years of protection.
8. Prior Knowledge Exclusion-If you were aware of a potential claim or incident before the policy started, your insurer may exclude it even if it occurred after the retroactive date. You must disclose known issues during the application or renewal process.
9. Tail Coverage (ERP – Extended Reporting Period)-Tail coverage allows you to report claims after your policy ends. This is vital when retiring, switching insurers without prior acts coverage, or dissolving a firm. Essential for lawyers exiting the practice
10. Firm Prior Acts-As the name implies covered work on behalf of the named insured firm is covered after a specified date. This can be an actual date or may state Full Prior Acts. If the firm had predecessor firms, this date may precede the formation date of the current firm.
11. Individual Prior Acts-Individual prior acts dates may restrict coverage for individual attorneys to a certain date with the firm. After this date coverage for the covered work on behalf of the named insured firm is provided. Not every attorney in the firm may have an individual prior acts date. If the attorney does not have an individual prior acts date, the assumption is either that start date with the named insured firm or the inception date of coverage falling under the firm prior acts date.
12. Career Coverage-An attorney with a career coverage endorsement has a date specified with the firm that likely precedes that attorney’s start date with the firm. If may also precede the firm’s inception date of claims made continuous coverage. With career coverage the attorney has coverage for work that the attorney has done prior to association with the current named insured firm. One should not confuse this coverage with predecessor firm coverage. Predecessor firm coverage is primary coverage that covers work done on behalf of the predecessor firm whereas career coverage provides secondary coverage only for the individually named attorney.
Understanding prior acts coverage isn’t just an insurance technicality, it’s a career safeguard. One overlooked clause could cost you tens of thousands of dollars in uncovered claims. Make it a point to:
• Know your retroactive date
• Avoid coverage gaps
• Ask your agent about tail options before making any changes
Need help understanding your prior acts date or switching policies without losing protection, contact L Squared Insurance today.
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Lee Norcross, MBA, CPCU
California License # 0D87292
L Squared Insurance Agency, LLC ® DBA in California as L2 L Squared Insurance Agency, License # 0L93416
Managing Director, CEO
Lee@L2Ins.com
616-726-7080
