A law firm may have substantial exposure for assets that are in their care, custody, or control. An Attorney malpractice insurance policy may exclude coverage if the asset is lost or stolen. Assets can be anything from a gold watch to a IOLTA or trust account. A staff member with sticky fingers, an office break-in, a data breach, or stolen passwords can all lead to a loss of value or the loss of the asset.
Attorney malpractice policies may contain language similar to the following in the exclusions:
based upon, arising out of or attributable to any loss or destruction, or any diminution in the value of any asset in the Insured’s care, custody, or control, or out of the misappropriation of or failure to give an account of, or failure to produce upon legitimate demand, any asset in the Insured’s care, custody, or control, including the commingling of funds.
Law Firms need to look to their Business Owners Policies, their Thief Policies and/or their Cyber Policy for coverage. The policies need to be properly endorsed with adequate policy limits. It is not unusual for a law firm client to require a bond to cover these exposures. While the bond provides protection for the client. It provides no protection for the insured law firm.
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Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080