There can be strings attached to a "free" retirement tail. The attorney takes the “free” non-practicing Extended Reporting Period Endorsement (ERP/Tail) on his Attorney Malpractice Insurance Policy but decides to start practicing law again. What is the impact on the ERP?
The answer to this is it depends. With some policies once the attorney starts practicing law again the “free” retirement ERP becomes null and void. Given the claims-made nature of Attorney Malpractice Insurance policies, it means that the attorney losses protection for covered past acts. With other policies, the ERP continues to protect work done under the ‘old’ policy but will not protect any new work.
The following is an excerpt from the MedMarc/Proassuance policy that deals with a non-practicing ERP, see paragraph 6.4.3:
“6.4. EXTENDED REPORTING PERIOD ENDORSEMENT - NON-PRACTICING INSURED
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.”
The following is an excerpt from the Axis policy that deals with a non-practicing ERP, see paragraph 3 paragraph II. Retirement
then you will be provided with an extended reporting period for an unlimited period of time at no additional charge. Upon election of a non-practicing extended reporting period, the entire premium therefor shall be deemed fully earned. The non-practicing extended reporting period shall not be cancelable.”
As stated in other blogs, attorney malpractice insurance policies are not standard, so it will be important to read the policy language.
Going forward with new insurance and depending on the circumstances, some insurers, will issue a policy with past acts to cover prior acts lost, but many will not. Normally the attorney ends up obtaining new attorney malpractice Insurance without any prior acts coverage. If that is the case the new policy only covers work going forward.
If attorney takes advantage of the ‘free’ non-practicing ERP, the attorney needs to understand consequences if attorney really does not want to fully “retire” from the practice of law as it relates to attorney malpractice insurance.
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Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080