When your insurer stops writing attorney malpractice insurance, every firm needs to address this issue promptly. Likely promptly will be at renewal. But for attorneys that are planning to retire this can be even more of an issue. With claims-made insurance coverage understand the needed steps to protect the your past acts coverage.
Retiring attorneys face a dilemma when they have stayed with an attorney malpractice insurer to take advantage of the “free” Non-practicing Extended Reporting Period Endorsement (ERP). The insurer’s obligation ends at the coverage expiration date.
Frustration builds once the attorney realizes that if they do not act during the current policy period, they lose the ability to take advantage of the “free” Non-practicing Extended Reporting Period Endorsement (ERP). The attorney may choose to retire earlier than planned or may not. The retiring or about to retire attorney needs to understand value of ERP. With most insurers the cost to purchase this ERP is between 2.5 to 3.5 times the expiring premium. Assuming a $1500 premium the value the attorney could be losing is around $4500.
What alternatives does the retiring attorney have:
1. Retire prior to the expiration of the ability to obtain the free ERP. (This needs execution within 30 to 60 days of policy expiration or termination.)
2. Renew with an insurer that will honor time spent with old insurer to obtain a free ERP. (Usually a new insurer will require at least one year with them prior to retiring to take advantage of this option.)
3. Renew with a new insurer and retire as planned. Just understand that attorney will need to purchase an ERP from the new insurer.
Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080