We continue to be approached by attorneys that are close to retirement that are “shopping” their professional liability insurance. In fact yesterday we had two such occurrences from solo attorneys close to retirement. Both it appears had qualified for “free” Non Practicing Extended Reporting Period Endorsements (ERP) with other competing insurance carriers. While we love to write new clients, L Squared tries to do what is in their best interests, which is not always telling them they should switch attorney malpractice insurance carriers.
The retirement ERP seems to be one of the least understood or known provisions of Lawyers Professional Liability Insurance policies. For a solo practitioner or in some cases a partnership with the attorney is close to retirement, generally the last thing the attorney should be doing is “shopping” their attorney malpractice insurance coverage.
The cost of an unlimited ERP is generally 2.5 to 3.5 times the current inforce premium. For simple math, assuming the current premium the attorney is paying is $2000. The cost for the attorney to purchase the equivalent ERP coverage that has been qualified for is in between $5000 to $7000. The only downside to the attorney is that the attorney needs to completely retire from the private practice of law and not want to restart private practice at a later date.
With some exceptions, most attorney malpractice insurance carriers require between 3 to 5 years for the attorney to qualify to take the retirement tail at no cost. If the attorney switches to save even $200 the little being saved by changing carriers close to retirement is not worth it.
If you are planning on retiring from your law practice in the next 3 to 5 years, in addition to checking your retirement savings accounts, Social Security, and Medicare, check with your malpractice insurance agent about what it takes to qualify for your retirement tail (non-practicing extended reporting Period endorsement) for attorney malpractice. A 15 minute conversation could end up saving you thousands of dollars.