An important and sometimes overlooked item is what are the entities that are actually insured under the Lawyer Professional Liability Insurance Policy?
Generally Attorney Malpractice Insurance policies are written on behalf of the named insured firm and all of the attorneys that work for the firm are insured for the work that they do for the firm. This simple concept if violated can cause problems at claim time.
If a firm has an attorney malpractice policy, it is important for the “Named Insured” to be properly listed on the declarations page or an applicable endorsement attached to the policy. Assuming that just because an attorney is listed on the policy has malpractice coverage for all of his or her work by the firm’s malpractice insurance policy is invalid. If the entity that the attorney is doing the work for is not listed on the declarations page or an endorsement there is likely no coverage. The following is an example of a typical exclusion for entities not listed on the declarations page:
“any claim made by or against any entity not named in the Declarations in which any Insured is a ten percent (10%) or more owner, partner, member, principal, or stockholder; or in which any Insured is an employee; or that is directly or indirectly controlled, operated, or managed by any Insured;
any claim made against any Insured involving any Insured’s activities as an owner, partner, officer, director, member, principal, stockholder, employee, or independent contractor of an entity (other than a prior law firm) not named in the Declarations;”
If the law firm for instance is a PLLC, and has a number of PC’s listed underneath the PLLC, then the PLLC and all the PC’s need to be listed on the declarations page or an attached endorsement. If an attorney has an independent PC, which we have a number of “of Counsel” attorneys that do, then you can assume that there is no coverage for the independent PC unless the firm’s attorney malpractice policy is properly endorsed. That “Of Counsel” needs to have a different policy to cover the PC that the attorney is actually doing the work for.
If the firm owns a Title Agency, unless it is listed on the policy declarations page or endorsed, there will be no coverage.
If the declarations page lists the individual attorney, but the attorney actually has another entity that the business runs through such as an LLC, then the LLC is the proper entity that needs to be listed on the declaration page. If the firm has a number of LLC’s or tradenames, then all of the entities that the firm does business as need to be listed.
A little upfront work with properly completing the application and making sure the policy reflects the firm’s intent, can prevent a problem at the time a claim is reported.