Disciplinary Coverage for Lawyers Professional Liability Insurance, not all are Created Equally
Disciplinary Coverage is an additional coverage found on most admitted and some non-admitted Lawyers Professional Liability Insurance policies. Some Lawyers Professional Liability Insurance carrier’s policies that do not offer this coverage are willing to endorse this coverage on if requested.
With Lawyers Professional Liability Insurance policies not being standard, this additional coverage can be called “Additional Coverages”, “Supplemental Payments” , “Disciplinary Proceedings”, “Regulatory Inquiry Extension” or another related names either in the body of the policy or as an endorsement to the policy.
Disciplinary Coverage is a defense only coverage; it will not provide coverage for any fines or sanctions that are levied against the attorney or firm. Disciplinary Coverage normally is not considered damages which means it will not reduce your liability limits on your Lawyers Professional Liability Policy. It is also not subject to the policy deductible. Limits for this coverage usually range from $5000 to $100,000 and can be for each incident, for the policy period or some combination in between.
Even though a Lawyers Professional Liability policy is normally “duty to defend”, this does not mean that disciplinary coverage is “duty to defend.” If the coverage is “duty to defend” once the matter is reported to the carrier, the carrier is responsible for providing the attorney with a defense up to the limits stated. Generally the carrier in consultation with the attorney will appoint counsel to handle the defense.
Many Lawyers Professional Liability policies offer “Reimbursement” coverage for Disciplinary matters. In this case the attorney needs to find and provide their own counsel to defend the matter and will be reimbursed for the cost of defense. Further limiting the carrier’s coverage, some “Reimbursement” policies will only provide this coverage if there are no findings against the attorney.
One carrier has stated that the average cost to defend a disciplinary matter is approaching $20,000. So even if your Lawyers Professional Liability Insurance policy has “Disciplinary Coverage”, it is important for you to read and understand what this policy truly coverages. All Lawyers Professional Liability Insurance policies are not created equally.
Not taking advantage of this policy coverage does not make sense. Firms have a fear that reporting disciplinary complaints can impact their attorney malpractice insurance premiums. While too many disciplinary reported complaints that do not result in an issue can cause problems. Not reporting issues that may lead to a proceeding may impact your malpractice insurance should the same issue turn into a malpractice claim at a later date. The other issue is that once a year you may need to attest on the renewal application that there are no disciplinary issues.
Click the blog tag Disciplinary Coverage by Insurer to see coverage differences
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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
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Lee@L2Ins.com
616-726-7080
