This is a frequently asked question. Attorney takes the “free” non-practicing Extended Reporting Period Endorsement(ERP/Tail) on his Lawyers Professional Liability Insurance Policy and decides to start practicing law again at a later date. What is the impact on the ERP?
In most circumstances once the attorney starts to practice law again the “free” retirement ERP becomes null and void. Given the claims made nature of Lawyers Professional Liability Insurance policy, it means that the attorney losses protection for past acts that were previously covered.
The following is an excerpt from the MedMarc/Proassuance policy that deals with a non-practicing ERP:
“6.4. EXTENDED REPORTING PERIOD ENDORSEMENT – NON-PRACTICING INSURED
6.4.1. A Non-Practicing Insured Extended Reporting Period Endorsement providing an unlimited extended reporting period will be issued and the premium and Deductible amounts shown in the Declarations will be waived (other than Deductible amounts the Insured becomes obligated to pay prior to the exercise of this provision) if an Insured lawyer:
a) dies;
b) becomes totally and permanently disabled and unable to engage in professional services as a result of accidental bodily injury, physical illness, or disease, and not involving the abuse of intoxicants or controlled substances, as certified by a physician acceptable to the Company; or
c) has been continuously insured with the Company for the immediately preceding three (3) years and is no longer engaged in professional services for which the Insured lawyer receives monetary or other financial compensation, as a result of total and permanent retirement or voluntary cessation of the full-time or part-time practice of law.
6.4.2. The Non-Practicing Insured Extended Reporting Period Endorsement does not extend the policy period or change the scope of coverage provided. The Non-Practicing Insured Extended Reporting Period Endorsement does not reinstate or increase the Limit of Liability on the policy. The Non-Practicing Insured Extended Reporting Period Endorsement does not provide coverage for claims that are covered under any other valid and collectible insurance, whether issued by the Company or any other insurer, or that would have been covered but for the exhaustion of the limit of liability of the other insurance or but for the failure of any Insured to comply with the terms and conditions of the other insurance.
6.4.3. If a Non-Practicing Insured Extended Reporting Period Endorsement is received as a result of retirement or disability and at a later date the Insured resumes rendering professional services, for any reason, in any jurisdiction, the Insured agrees that on that date coverage under the Non-Practicing Insured Extended Reporting Period Endorsement will terminate.”
If attorney chooses to purchase new Lawyers Professional Liability Insurance it will be without any prior acts coverage and will only cover acts on a go forward basis. In some circumstances it is possible to purchase a policy from a non-admitted carrier to either “repair” the past acts or cover past acts, but for most attorneys this is very expensive.
If attorney takes advantage of the non-practicing ERP, attorney need to understand consequences if attorney really does not want to fully “retire” for the practice of law as to Lawyers Professional Liability Insurance Coverage.