Claims-Made Attorney Malpractice Insurance (LPL) Needs to Stay Inforce to be Valid
All Lawyers Professional Liability Insurance (LPL) policies sold in the USA are claims-made policies. This issue comes up when attorneys falsely believe if they let their coverage lapse that the attorney still has past acts coverage. Nothing can be further from the truth. Once claims-made coverage lapses, without an extended reporting period endorsement (ERP or Tail), there is no insurer to report a claim. Hence past acts coverage is gone.
The following is an actual exchange between the L Squared Agency and a past insured having let their LPL coverage lapse.
From Attorney
I apologize for the delay. My computer system crashed. The cost of repair is excessive. Is there any way to delay the renewal or to re-apply in 30 days?
Response to Attorney
Sorry to hear about your computer. If you wish to maintain your prior acts, you must have continuous claims-made coverage and need to renew now. If that is not a concern than you can reapply at any time. But there will be no prior acts coverage.
From Attorney
I do not understand. I maintained coverage for 23 years. So, if I cannot renew immediately, anything which happens is no longer the insurer’s responsibility? Note, I have not had any complaints in 23 years of practice.
Response to Attorney
All LPL policies sold in the US are claims-made policies. Meaning a reported claim is reported to the current inforce insurer provided that the claim made occurs after the continuous claims-made prior acts date. If coverage lapses there is no active insurance to report the claim. Once there is a coverage lapse, new insurance has a prior acts date equal to the new effective date. You no longer have prior acts coverage.
For more straight talk about coverage contact L Squared Insurance Agency LLC which specializes in claims made insurance for professionals.
Note: The above is general information about a Claims Made Insurance policy concept. Different insurance policies and different situations may or may not treat these concepts in a similar manner.
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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
