Attorney Malpractice Insurance Disciplinary Coverage Duty to Defend vs Reimbursement
Disciplinary Coverage is an additional coverage found on most admitted and some non-admitted Attorney Malpractice Insurance policies. Some malpractice insurers that do not offer this coverage are willing to endorse it on if requested.
With Attorney Malpractice Insurance policies not being standard, this additional coverage can be called ‘Additional Coverages’, ‘Supplemental Payments’ , ‘Disciplinary Proceedings’, ‘Regulatory Inquiry Extension’ or another of related names either in the body of the policy or as an endorsement to the policy.
Disciplinary Coverage is a defense only coverage; it will not indemnify for any fines or sanctions that are levied against the attorney or firm. Disciplinary Coverage normally is not considered ‘damages’ which means it will not reduce your liability limits on your Lawyers Professional Liability Policy. It is also not subject to the policy deductible. Limits for this coverage usually range from $5000 to $100,000 and can be for each incident, for the policy period or some combination in between.
Even though an Attorney Malpractice Insurance policy is normally ‘duty to defend’, this does not mean that disciplinary coverage is ‘duty to defend’. If the coverage is ‘duty to defend’ once the matter is reported to the carrier, the carrier is responsible for providing the attorney and pays defense costs up to the limits stated. Generally the carrier in consultation with the attorney will appoint counsel to handle the defense.
Many Attorney Malpractice Insurance policies offer ‘Reimbursement’ coverage for Disciplinary Matters. In this case the attorney needs to find counsel to defend the matter and will be reimbursed for the cost of defense. Further limiting the insurer’s coverage, some ‘Reimbursement’ policies will only pay the defense costs if there are no findings against the attorney.
One insurer has stated that the average cost to defend a disciplinary matter is approaching $20,000. So even if your Attorney Malpractice Insurance policy has ‘Disciplinary Coverage’, it is important for you to read and understand what this policy truly coverages. All Attorney Malpractice Insurance policies are not created equally.
Click the blog tag Disciplinary Coverage by Insurer to see coverage differences
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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
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Lee@L2Ins.com
616-726-7080
