Moving a law practice to a different state opens an exciting new chapter in life. Make sure to add insurance to your moving checklist. As with the practice of law, property and casualty insurance is regulated by each state. Insurers and insurance policies can differ by state. To prevent a coverage gap, make sure that you notify all your property & casualty insurance insurers and /or agents, including your attorney malpractice insurer as soon as possible. Do not wait until renewal.
Be prepared for your malpractice insurer to either cancel your coverage midterm or non-renew your Insurance at renewal. Even if your agent and insurer are licensed in the new state this normally occurs. The new state may have different policy forms for even the same insurer or your insurer may not be licensed or want to write in your new state. Remember that attorney malpractice insurance is written on a ‘claims-made’ policy form. So, it is important that you address your past acts coverage.
It is common for your new state insurer to not provide past acts coverage for your old state. This can happen even if it is the same insurer. There are a number of reasons from the policy forms differing to more importantly your new insurer may not be writing attorney malpractice insurance in your old state. Particularly with attorney malpractice, insurers do not want exposure for states where they may not have empaneled counsel for work you did in another state.
If you cannot obtain past acts coverage you will need to exercise your rights under your current attorney malpractice insurance policy to purchase an Extended Reporting Period Endorsement (ERP/Tail). Your rights to purchase an ERP are time sensitive. With most policies you only have 30 or 60 days from coverage termination to exercise that right. If you cannot obtain past acts coverage in your new state, purchase the ERP as soon as possible. This ERP must be purchased from your incumbent insurer. It is fully earned so be prepared to pay the entire amount due in one lump sum.
The good news is that if you do purchase an ERP, your new policy without past acts coverage is less expensive than a ‘fully rated’ policy. Your rates may be higher or lower depending on your new state insurer rates.
If you find yourself in need on a new insurance agent, contact L Squared Insurance Agency. L Squared is a nationwide agency that can help you move across state lines.
Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080