As we go through the year, many attorneys that had been with National Union (AIG) for the attorney malpractice had stayed with them to take advantage of the “free” Non-practicing Extended Reporting Period Endorsement (ERP). We continue to get ongoing questions concerning AIG’s withdrawal from the Lawyers Professional Liability Insurance market. The following are concerns that many attorneys getting close to retirement have when they take advantage of the “free” Non-practicing Extended Reporting Period Endorsement regardless of insurance carrier. Note many of these answers are specific to the AIG policy being discussed, your policy may differ on specific details such as notification periods.
"I am frequently asked these questions, but in general “non-Practicing” means exactly that, if you continue to practice or start to practice again after the “non-Practicing” Extended Reporting Period Endorsement (ERP) is issued, it will void the non-practicing ERP coverage. National Union’s (AIG) obligations to you end at the termination date of the policy. Your rights to either purchase at a charge or obtain the no cost non-practicing ERP end after 60 day period has elapsed.
“(1) Common Extended Reporting Period Terms: An Extended Reporting Period is not cancelable. This sub-paragraph (1) shall not apply to any cancellation resulting from non-payment of premium. The rights contained in this paragraph (k) shall terminate unless written notice of election of an Extended Reporting Period together with any additional premium due is received by the Insurer no later than sixty (60) days subsequent to the effective date of the cancellation, nonrenewal or change in Firm membership.”
If the deadline to get the information to AIG is one day late, AIG in the past has not been willing issue the endorsement.
Also if you decided to renew with another carrier, you are then subject to the terms and conditions of that new carrier.
See below for answers to each of your individual questions."
Giving this attention is causing me to revisit the issue of tail coverage (ERP). I'm doing very little in terms of practicing, but would feel "emasculated" if I literally can't practice at all. That bothers me.
I reviewed my policy regarding ERP on pages 15 and 16 and have some questions and issues to help me decide which way to go.
1. Is it correct that I can apply for ERP all the way to the expiration date of my current coverage? Is there any requirement to apply in advance, like 30 days?
You have up to 60 days from the policy termination date to apply for this coverage. But if you purchase coverage from another carrier on November 1 or later, the “non-Practicing” ERP is no longer available at no charge.
2. Is receiving the coverage automatic due to my current policy provisions, without the need to somehow qualify?
You do have to provide written notification within the 60 day time period that you want the non-Practicing ERP.
3. Is the coverage unlimited in duration, and without cost.
As you have been with National Union (AIG) for 3 years there is no cost to the non-Practicing ERP and it is for an unlimited duration. Note that this endorsement becomes part of your expiring coverage subject to all terms and conditions of your current policy.
4. If I dissolve my P. C., will it still be covered, along with me?
Dissolving your PC will not impact this coverage, as the coverage is issued for you as an individual attorney.
5. For over 25 years, I've handled an annual accounting, and an occasional petition, for a guardianship. The family will be upset about changing attorneys. Can an inquiry be made to AIG to determine if this relatively simple representation of one client can continue as an exception to whatever provision states that I have to cease practicing? Further, is there any way whatsoever to have ERP apply to acts performed prior to a specific date, and go "bare" for acts performed thereafter?
The non-practicing ERP terms are not negotiable. AIG will only offer the terms as outlined in your policy. Again non-practicing means non-practicing.
5. Can you send me whatever conditions and provisions apply to the ERP?
The only thing the ERP endorsement does is amend the reporting period to unlimited. All other terms and conditions of your current policy continue.
“The Extended Reporting Period does not extend the Policy Period or change the scope of coverage provided. The Extended Reporting Period does not reinstate or increase the Insurer’s Limit of Liability. The Limits of Liability applicable to Claims reported to the Insurer during the Extended Reporting Period shall be the same Limits of Liability that would be applicable if the Claim had been reported on the last day of the Policy Period.”
6. If I elect ERP, and decide a few years later to return to practice, will there be any problem with a new carrier in terms of coverage, without any kind of lapse?
If you decided to go back into practice the non-practicing ERP will no longer be inforce. Although it is currently possible to write a new policy that would cover your past acts at a later date, the cost of this is very expensive and is only offered through Surplus Lines carriers. The policy terms and conditions are different then what you currently have. I cannot guarantee that in the future that this coverage would continue to be offered or that you would qualify for it.
8. Is the receipt of referral fees permissible under ERP coverage?
Referral fees would be considered practicing law.