Buried in the policy language for certain insurers are additional coverages that not all admitted attorney malpractice insurers provide. The AIG policy is one of those policies. Found in the Special Benefit Policy Section are additional coverages for Claims Expenses:
1. Claim Expenses.
a) The first two thousand five hundred dollars ($2,500) of claim expenses incurred by us for each claim shall not be subject to the deductible and shall erode the limits of liability.
b) If the “each claim” limit of liability stated in the Declarations is less than five hundred thousand dollars ($500,000), the first one hundred thousand dollars ($100,000) of claim expenses paid in excess of the amount set forth in Subparagraph a. above is subject to the deductible and is in addition to, and shall not erode, the limits of liability.
c) If the “each claim” limit of liability stated in the Declarations is at least five hundred thousand dollars ($500,000) but is less than two million dollars ($2,000,000), the first two hundred fifty thousand dollars ($250,000) of claim expenses paid in excess of the amount set forth in Subparagraph a. above is subject to the deductible and is in addition to, and shall not erode, the limits of liability.
d) If the “each claim” limit of liability stated in the Declarations is two million dollars ($2,000,000) or more, the first five hundred thousand dollars ($500,000) of claim expenses paid in excess of the amount set forth in Subparagraph a. above is subject to the deductible and is in addition to, and shall not erode, the limits of liability.
e) The claim expense amounts described in Subparagraphs b., c., and d. above are aggregate amounts that apply regardless of the number of claims. Upon exhaustion of such aggregate amounts by the payment of claim expenses additional amounts for claim expenses shall erode the “each claim” and aggregate limits as set forth in the section entitled Limits of Liability & Deductible.
Paragraph a) is unique providing an additional layer of claims expenses that in cases where a client makes a nuisance claim might cover some or most of the out of pocket expenses for the firm. Paragraphs b), c), & d) provide ‘limited CEOL’ that for other insurance policies might require the purchasing at an additional premium.
When comparing coverages and policy premiums make sure to look beyond the limits and deductible. Reading the policy may show coverages that the firm deems important.
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Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080