Old Republic Attorney Malpractice Insurance Retirement Tail

Old Republic 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 Old Republic policy provides a nonpracticing ERP based on the following policy language:

VII. EXTENDED REPORTING PERIODS

As used herein, Extended Reporting Period means the period of time after the end of the Policy period for reporting claims that are made against the Insured during the applicable Extended Reporting Period by reason of an act or omission that occurred prior to the end of the Policy period and is otherwise covered by this Policy.

A. Automatic Extended Reporting Period

If this Policy is canceled by the Insured or non-renewed by the Company or by the Named Insured, the Company will provide the Named Insured an automatic, non-cancelable Extended Reporting Period starting at the termination of the 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 after sixty (60) days.

B. Optional Extended Reporting Period

1. If this Policy is canceled by the Named Insured, or non-renewed by either the Named Insured or the Company, then the Named Insured shall have the right to purchase an Optional Extended Reporting Period. Such right must be exercised by the Named Insured within sixty (60) days of the termination of the Policy period by providing:

a. written notice to the Company; and
b. the amount of additional premium described below.

2. The additional premium for the Optional Extended Reporting Period shall be based upon the rates for such coverage in effect on the date this Policy was issued or last renewed and shall be for one (1) year at 100% of such premium; two (2) years at 150% of such premium; three (3) years at 175% of such premium; six (6) years at 225% of such premium; or, for an unlimited period at 250% of such premium.

3. The premium for the Optional Extended Reporting Period is due on its effective date. This Optional Extended Reporting Period is non-cancelable and the entire premium shall be deemed fully earned at its commencement without any obligation by the Company to return any portion thereof.

C. Death or Disability Extended Reporting Period

If an Insured dies or becomes totally and permanently disabled during the Policy period, then upon the latter of the expiration of: the Policy period; any renewal or successive renewal of this Policy; or any Automatic or Optional Extended Reporting Period, the Insured shall be provided with a Death or Disability Extended Reporting Period as provided below:

1. In the event of death, the estate, heirs, executors or administrators of such Insured must provide the Company with written proof of the date of death. This Death or Disability Extended Reporting Period is provided to the estate, heirs, executors and administrators of such Insured until the executor or administrator of the estate of such Insured is discharged.

2. If an Insured becomes totally and permanently disabled, such Insured or such Insured’s legal guardian must provide the Company with written proof, certified by the Insured’s physician, that such Insured is totally and permanently disabled, including but not limited to, the date the disability commenced. The Company retains the right to contest the certification made by the Insured’s physician and it is a condition precedent to this coverage that such Insured agree to submit to a medical examination by any physician designated by the Company.

No additional premium will be charged for a Death or Disability Extended Reporting Period. This Death or Disability Extended Reporting Period is provided until such Insured shall no longer be totally and permanently disabled or until such Insured’s death, in which case paragraph 1. hereof shall apply.

D. Non-Practicing Extended Reporting Period

1. If an Insured retires or otherwise voluntarily ceases, permanently and totally, the “private practice of law” during the Policy period and has been continuously insured by the Company for at least three (3) full consecutive years, then such Insured shall be provided with a Non-Practicing Extended Reporting Period commencing upon the latter of the expiration of: the Policy period; any renewal or successive renewal of this Policy; or any Automatic or Optional Extended Reporting Period.

2. The Non-Practicing Extended Reporting Period is provided until such Insured shall resume the “private practice of law” or until the death of such Insured in which case subparagraph C.1. hereof shall apply.

3. No additional premium will be charged for a Non-Practicing Extended Reporting Period.

As used herein, the “private practice of law” means the practice of law performed by an Insured for a fee, including hourly, contingent or lump sum, as a sole practitioner or as a partner, officer, director, stockholder-employee, associate, manager, member or employee, of a law firm, or any agreement to act as an Independent Contractor or Of Counsel to a law firm. “Private practice of law” does not include the practice of law by an Insured on an eleemosynary (a pro bono) basis or services performed by an Insured solely as a mediator or arbitrator.

E. Extended Reporting Period limits of liability and deductibles

1. Automatic and Optional Extended Reporting Period limits of liability and deductibles

a. The Company’s liability for all claims reported during the Automatic Extended Reporting Period shall be part of and not in addition to the limits of liability for the Policy period as set forth in the Declarations and Section II. LIMITS OF LIABILITY AND DEDUCTIBLE, paragraphs A. and B. of this Policy. The deductible applicable to such claims shall be part of and not in addition to the deductible as set forth in the Declarations and Section II. LIMITS OF LIABILITY AND DEDUCTIBLE, paragraph C. of this Policy.

b. Where the Company non-renews this Policy or the Policy is cancelled by the Named Insured, the Company’s liability for all claims reported during the Optional Extended Reporting Period shall be part of and not in addition to the limits of liability for the Policy period as set forth in the Declarations and Section II. LIMITS OF LIABILITY AND DEDUCTIBLE, paragraphs A. and B. of this Policy. The deductible applicable to such claims shall be part of and not in addition to the deductible as set forth in the Declarations and Section II. LIMITS OF LIABILITY AND DEDUCTIBLE, paragraph C. of this Policy.

c. If this Policy is canceled by the Named Insured the Company’s liability for all claims reported during the Optional Extended Reporting Period shall be part of and not in addition to the limits of liability for the Policy period as set forth in the Declarations and Section II. LIMITS OF LIABILITY AND DEDUCTIBLE, paragraph A. and B. of this Policy. The deductible applicable to such claims shall be part of and not in addition to the deductible as set forth in the Declarations and Section II. LIMITS OF LIABILITY AND DEDUCTIBLE, paragraph C. of this Policy.

d. If the Company offers to renew this Policy, and the Named Insured refuses such renewal offer, then the Company’s liability for all claims reported during the Optional Extended Reporting Period shall be reinstated to the limits of liability applicable to this Policy as set forth in the Declarations and Section II. LIMITS OF LIABILITY AND DEDUCTIBLE, paragraphs A. and B. of this Policy. The deductible applicable to such claims shall be reinstated to an amount equal to the deductible as set forth in the Declarations and Section II. LIMITS OF LIABILITY, paragraph C. of this Policy.

2. Death or Disability Extended Reporting Period and Non-Practicing Extended Reporting Period limits of liability

a. Limit of Liability – Each Claim

Subject to paragraph b. below, the Company’s limit of liability for each claim first made against the Insured and reported to the Company during the Death or Disability Extended Reporting Period or Non-Practicing Extended Reporting Period shall not exceed the amount stated in the Declarations as the “Death or Disability Extended Reporting Period and Non-Practicing Extended Reporting Period limit of liability: Each Claim”.

b. Limit of Liability – In the Aggregate

The limit of liability of the Company for all claims first made against the Insured and reported to the Company during the Death or Disability Extended Reporting Period or Non-Practicing Extended Reporting Period shall not exceed the amount stated in the Declarations as the “Death or Disability and Non-Practicing Extended Reporting Period limit of liability: Aggregate”.

c. No Deductible

No deductible shall apply to claims first made against the Insured and reported to the Company during the Death or Disability Extended Reporting Period or Non-Practicing Extended Reporting Period.

F. Elimination of right to Extended Reporting Period

There is no right to any Extended Reporting Period:

1. if the Company shall cancel this Policy; or

2. if during the Policy Period such Insured’s right to practice law is revoked, suspended or surrendered at the request of any judicial or regulatory authority for reasons other than that the Insured is totally and permanently disabled.

G. Extended Reporting Period is not a new Policy

It is understood and agreed that any Extended Reporting Period shall not be construed to be a new Policy and any claim submitted during such period shall otherwise be governed by the Policy.

IV. DEFINITIONS

Claim means a demand, including the service of suit or the institution of any alternative dispute resolution proceeding, received by the Insured for money or services arising out of an act or omission, including personal injury, privacy injury and identity theft, or advertising injury in the rendering of or failure to render legal services.

Insured means the Named Insured, predecessor firm, successor firm and the persons or entities described below:

1. any lawyer (including a government affairs advisor or lobbyist), partnership, professional corporation, professional association, limited liability corporation or limited liability partnership who is or becomes, a partner, officer, director, stockholder-employee, associate, manager, member or employee of the Named Insured or successor firm during the Policy period shown in the Declarations, solely while acting in a professional capacity on behalf of the Named Insured or any predecessor firm;

2. any lawyer (including a government affairs advisor or lobbyist) previously affiliated with the Named Insured or successor firm, or a predecessor firm as a partner, officer, director, stockholder-employee, associate, manager, member or employee but only for legal services performed on behalf of the Named Insured, successor firm or a predecessor firm at the time of such affiliation;

However, the term previously affiliated as used herein does not include a lawyer who, in accordance with Section VII. EXTENDED REPORTING PERIODS, qualifies for the Non-Practicing Extended Reporting Period. Such Insured will be deemed to be an Insured under subparagraph 1. above;

3. any:

a. lawyer (including a government affairs advisor or a lobbyist), law firm, partnership, professional corporation, professional association, limited liability corporation or limited liability partnership who acts as Of Counsel to the Named Insured or who acts as Of Counsel to the successor firm, and

b. non-employee independent contractor attorney to the Named Insured,

but only for legal services rendered on behalf of the Named Insured and only if a fee inured or, in the event of a contingency fee, would have inured, to the Named Insured.

No fee need inure to the Named Insured where eleemosynary (pro bono) legal services are rendered and where at the time of retention, there was approval by the appropriate committee or lawyer within the Named Insured that the matter would be handled without compensation. Any lawyer, law firm, partnership, professional corporation, professional association, limited liability corporation or limited liability partnership who acts as Of Counsel to the Named Insured, who previously qualified as an Insured under subparagraph 1. above, but left the full-time practice of law to practice exclusively as Of Counsel to the Named Insured, will be deemed to be an Insured under subparagraph 1. above; and

4. any person who is a former or current employee, other than an employed lawyer, of the Named Insured or any predecessor firm, but solely for services performed by such person within the course and scope of their employment by the Named Insured or any predecessor firm and provided that the services in dispute are legal services of the Named Insured or any predecessor firm.

Insured does not include those persons or entities who have no oral or written partnership, shareholder or employment agreement with the Named Insured and who:

a. has an office share relationship with any Insured; and
b. are deemed to be partners, officers, directors, employees, associates, managers or members of the Named Insured solely by operation of law.

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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