More than a few attorneys forget to take advantage of Disciplinary Coverage until it is too late. Attorney Malpractice Insurance policies that offer this coverage can be ‘Duty to Defend’ or ‘Reimbursement’. Even though the AIG policy’s malpractice coverage is ‘Duty to Defend’, the disciplinary coverage is ‘Reimbursement’. The AIG policy pay up to $25,000 per covered occurrence and up to $100,000 for the policy period. The AIG policy disciplinary reimbursement is not subject to the policy deductible which is typical of other insurers who provide this coverage.
2. Disciplinary Proceeding Defense Cost Reimbursement.
If a disciplinary proceeding is brought against you during the policy period, we will reimburse reasonable attorney’s fees and expenses you pay a third party for legal advice and representation to you in such matters, as well as reasonable costs, expenses and fees you incur to respond to or prepare your defense. Our determination as to the reasonableness of such fees, costs and expenses will be conclusive. We will not pay fines, penalties, sanctions, or any other amounts awarded against you in any disciplinary proceeding.
You must provide written notice to us as soon as practicable after receipt of the notice of disciplinary proceeding at our address stated in the declarations, but no later than sixty (60) days after the expiration of the policy period. No extended reporting period shall be available as respects coverage for disciplinary proceedings.
The most we will reimburse you for any one disciplinary proceeding is twenty-five thousand dollars ($25,000). The most we will reimburse during the policy period, if applicable, for all disciplinary proceedings is one hundred thousand dollars ($100,000) in the aggregate. Any reimbursement made pursuant to this provision shall not be subject to a deductible and shall be in addition to the limits of liability set forth in the Declarations.
Notwithstanding the foregoing, this provision shall not apply to any disciplinary proceeding arising out of a wrongful act occurring prior to the policy period if, prior to the inception date of the first Lawyers Professional Liability Insurance Policy issued by us to the named insured and continuously renewed and maintained in effect to the inception of this policy period, you:
a. gave notice to any prior insurer of the wrongful act; or
b. if you had a reasonable basis:
i. to believe that you had committed a wrongful act, breached a professional duty, violated a disciplinary rule or engaged in professional misconduct; or
ii. to foresee that a disciplinary proceeding would be made against you.
Not taking advantage of this policy coverage does not make sense. Firms have a fear that reporting disciplinary complaints can impact their attorney malpractice insurance premiums. While too many disciplinary reported complaints that do not result in an issue can cause problems. Not reporting issues that may lead to a proceeding may impact your malpractice insurance should the same issue turn into a malpractice claim at a later date. The other issue is that once a year you may need to attest on the renewal application that there are no disciplinary issues.
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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
(616) 940-1101 Ext. 7080