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 Arch Insurance policy’s malpractice coverage is ‘Duty to Defend’, the disciplinary coverage is ‘Reimbursement’. Policy wording for disciplinary coverage and reporting differs by carrier. The disciplinary reimbursement is not subject to the policy deductible.
From Declarations Page:
B. Disciplinary Proceedings
$25,000 Each Disciplinary Proceeding
B. DISCIPLINARY PROCEEDINGS SUB-LIMIT OF LIABILITY
1. The Company will reimburse the Insured for defense costs incurred by the Insured to defend Disciplinary Proceedings. No deductible will apply to this coverage.
2. As a condition precedent to this coverage, the Insured must give the Company written notice within thirty (30) days of receipt of any Disciplinary Proceeding that has been initiated against the Insured.
3. Solely for the purpose of this coverage, the Insured will have the right and duty to defend the Disciplinary Proceeding; provided, however, that the Company will have the right to effectively associate in the defense and investigation of the Disciplinary Proceeding and be kept fully apprised as to the status of the Disciplinary Proceeding.
4. Solely for the purpose of this coverage, the Insured will have the right and duty to select counsel subject to the Company’s prior written consent, which will not be unreasonably withheld.
5. The Company will not indemnify an Insured for any Damages incurred as a result of any Disciplinary Proceeding. The Company will not indemnify any Insured for defense costs in which the final resolution of the Disciplinary Proceeding results in the suspension or revocation of the Insured’s license or right to practice law. The Company will have no obligation to reimburse the Insured for defense costs other than upon the final resolution of the Disciplinary Proceeding as described herein.
III. LIMITS OF LIABILITY AND DEDUCTIBLE
2. Limit of Liability Disciplinary Proceedings: The Company’s Limit of Liability for defense costs for each Disciplinary Proceeding is the amount shown in Item 4.B. The Aggregate Limit of Liability amount shown in Item 4.B. of the Declarations is the most we will pay for all Disciplinary Proceedings made and reported during the Policy Period.
This Limit of Liability is in excess of the Limit of Liability Each Claim, but part of, and not in addition to, the Aggregate Limit of Liability Each Policy Period specified in Item 4 of the Declarations. If the alleged negligent act, error or omission that gave rise to the Disciplinary Proceeding results in a Claim, the Limit of Liability Each Claim will not be reduced by any defense costs reimbursed to the Insured in connection with such Disciplinary Proceeding.
F. Disciplinary Proceedings means a grievance or allegation involving an act or omission made against an Insured to any professional entity charged with the responsibility to oversee lawyer disciplinary matters.
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 about 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