KnightBrook (LawGold) Attorney Malpractice Insurance Retirement Tail
Attorney Malpractice Insurance Policies are claims-made and reported policies. When the coverage ends the ability to report claims for past acts ends at policy termination. Attorneys leaving private practice via retirement, becoming a judge or working in the private or public sector need to protect their past acts. Insurers will not renew attorney malpractice policies for attorneys that are no longer in private practice. Given this it is important for attorneys to protect their past acts once coverage ends. For solo practitioners and small firms that may close once the practitioner leaves, the nonpracticing Extended Reporting Period Endorsement/Retirement Tail (ERP) may be an answer.
Note: For attorneys closing or leaving their small firm to work at another law firm the nonpracticing Extended Reporting Period Endorsement/Retirement Tail (ERP) is not an option. Coverage for their past acts is outside of the scope of this blog.
Each insurer’s policy differs on requirements and wording for obtaining this valuable ERP endorsement at no or reduced cost. Careful planning by the attorney may save the attorney thousands of dollars. The ability to request an ERP differs by insurer but is time sensitive. Regardless of the insurer, the attorney must completely stop private practice to obtain the nonpracticing ERP.
The KnghtBrook Insurance policy provides a nonpracticing ERP based on the following policy language:
VI. CONDITIONS
I. Extended Reporting Period Options
1. The following provisions are applicable to all extended reporting periods:
a. The extended reporting periods do not change the scope of coverage provided;
b. The extended reporting periods only apply to claims resulting from covered acts committed before the end of the policy period and on or after the retroactive date, if any, shown in the Declarations;
c. The extended reporting periods do not reinstate or increase the limits of liability;
d. The extended reporting periods are not renewable; and
e. The right to any extended reporting period option contained in this Section VI.I. is not available to any of you if, at the time such extended reporting period option is requested:
(i) any amount due under this policy is unpaid including, but not limited to, premiums or deductibles;
(ii) any of you are non-compliant with any of the terms and conditions of this policy;
(iii) any misrepresentation or omission has been made by you in the application for this policy; or
(iv) any insured seeking to exercise the right to an extended reporting period has their license to practice law revoked, suspended, or surrendered.
f. Coverage provided pursuant to this Section V.I. cannot be canceled or terminated.
g. The additional premium for any extended reporting period is fully earned at the inception of the extended reporting period.
4. Non-Practicing Extended Reporting Period
If, during the policy period, any of you, other than the Named Insured, retire or otherwise permanently cease the professional practice of law for reasons not related to suspension or
revocation of your license to practice law, or death or disability as described in Section VI.I.5. below, then we will provide such of you with a non-practicing extended reporting period as
set forth below:
a. The non-practicing extended reporting period will start on the latter of:
(1) the date you cease the professional practice of law;
(2) the expiration of the policy period or any renewal or successive renewal of this policy, or any automatic or optional extended reporting period.
b. The non-practicing extended reporting period will end on the earliest date one of the following occurs:
(1) you resume the professional practice of law; however, you may purchase, at our option, a policy from us to reinstate full prior acts coverage;
(2) any insurance is issued which replaces, in whole or in part, the coverage afforded by the non-practicing extended reporting period;
(3) the Limits of Liability have been exhausted; or
(4) such of you covered by the non-practicing extended reporting period dies.
c. No additional premium shall be charged for the non-practicing extended reporting period.
d. We will issue a non-practicing extended reporting period endorsement only if:
(1) you request the endorsement no more than sixty (60) days after the date you cease the professional practice of law, or sixty (60) days after the end of the policy period, whichever is earlier. Such request must include written notification of your cessation of the professional practice of law; and
(2) you promptly pay when due the additional premium for the endorsement.
e. In no event will the non-practicing extended reporting period described in this Section V.I.4. apply to any lawyer, law firm, partnership, professional corporation, professional association, limited liability corporation, limited liability partnership, or any other person or entity, that acts or acted as Of Counsel, or as a non-employee independent contractor attorney, a per diem attorney, or in a substantially similar role, to the Named Insured.
5. Death or Disablement Extended Reporting Period
a. If, during the policy period, any of you die or become totally and permanently disabled, we will extend a death or disablement extended reporting period at no charge applicable to those of you who have died or become totally and permanent disabled. Totally and permanently disabled means that you have become so disabled as to be completely prevented from rendering professional services, and such disability:
(1) has existed for not less than ninety (90) consecutive days; and
(2) is expected to be continuous, total, and permanent.
b. The death or disablement extended reporting period will start on the date you die or become totally and permanently disabled, and will end when one of the following occurs:
(1) the executor or administrator of your estate has been discharged;
(2) the total and permanent disability ends, whether or not you resume practice;
(3) any insurance is issued which replaces, in whole or in part, the coverage afforded by the death or disablement extended reporting period; or
(4) the Limits of Liability have been exhausted.
c. We will issue a death or disablement extended reporting period endorsement only if you or your representative request it no more than ninety (90) days after the date of your death or total permanent disability, or ninety (90) days after the end of the policy period, whichever is later. Such request must include:
(1) a copy of the certified death certificate; or
(2) written proof, certified by your attending physician, of total permanent disability including the date it occurred.
IV. DEFINITIONS
G. Covered act means an act, error, or omission, including breach of contract or duty, breach of fiduciary duty, or personal injury arising from professional services performed by any of you.
N. Extended reporting period means the period of time after the end of the policy period for reporting claims arising out of covered acts occurring during the policy period. Terms and conditions relating to the purchase of an extended reporting period endorsement are set forth in Section VI.I.
U. Personal injury means allegations of libel, slander, or other defamatory or disparaging material or publication; utterance in violation of an individual’s right of privacy; false arrest, detention, or imprisonment; covered entry, eviction, or other invasion of the right of private occupancy; or malicious prosecution.
V. Policy period means the period of time between the inception date shown in Item 2. of the Declarations and the effective date of cancellation or expiration of this policy but specifically excludes any extended reporting period.
Z. Professional services means legal and consulting services and activities performed by you for others provided that the remuneration for such services or advice, or a portion thereof, inures to
your benefit:
1. as a lawyer, notary public, arbitrator, mediator, fiduciary, speaker, or author of legal treatises;
2. as a lawyer in connection with any bar association, including its governing board or any of its committees;
3. in your publication or presentation of research papers or similar materials;
4. as a lawyer providing pro bono representation; or
5. provided by your employee in connection with assisting a lawyer to perform the activities described in IV.Z.1., IV.Z.2., IV.Z.3. and IV.Z.4. above for others on behalf of you.
Switching insurers near retirement to save a few dollars may cost an insured attorney thousands of dollars to buy the same protection. Planning retirement or a transition out of private practice should be discussed with your malpractice insurance agent prior to ending private practice when possible.
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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
