Attorney Wants to Drop Prior Acts Coverage at Renewal
Attorney Malpractice Insurance or Lawyers Professional Liability Insurance use a claims-made policy form. Dropping prior acts coverage at renewal can have serious consequences, as it essentially eliminates coverage for claims arising from incidents that occurred before the new policy’s effective date. Here are key considerations and potential risks:
Key Risks of Dropping Prior Acts Coverage:
- Loss of Coverage for Past Work: Any claims made after renewal for services provided before the new policy date will be uninsured. Even if the attorney is switching practice to lower risk practice areas certain practice areas such as business formation and estate planning have long tails. Alleged errors may surface years later.
- Gaps in Coverage: If the attorney later faces a malpractice claim related to past work, there will be no policy in place to cover defense costs or damages.
- Difficulty Reinstating Coverage: If the attorney later decides to reinstate prior acts coverage, insurers may charge higher premiums or refuse to cover prior work altogether.
- Client & Bar Association Concerns: State bar associations and clients may require continuous claims-made coverage for professional liability.
- Retirement or Reduce Practice Hours: Attorney malpractice claims arise from past work. When winding down a practice the last thing you want to address is a claim without any insurance coverage. At retirement protecting accumulated assets is paramount. Your insurer may offer a free or reduced cost tail if ending practicing law. The costs of a tail is small compared to defending and paying a malpractice claim without coverage.
Unless there are logical reasons, L Squared Insurance Agency will not knowingly write attorney malpractice insurance policy that does not match the prior acts coverage of the firm’s current policy.
Get Lawyers Liability Insurance Malpractice Insurance Quote
Contact Me Today
Lee Norcross, MBA, CPCU
California License # 0D87292
L Squared Insurance Agency, LLC ® DBA in California as L2 L Squared Insurance Agency, License # 0L93416
Managing Director, CEO
Lee@L2Ins.com
616-726-7080
