More than a few attorneys forget to take advantage of Disciplinary Coverage until it is too late. Attorney Malpractice Insurance policies that offer this coverage can be ‘Duty to Defend’ or ‘Reimbursement’. Even though the ISMIE Insurance malpractice coverage is ‘Duty to Defend’, the disciplinary coverage is ‘Reimbursement’. Policy wording for disciplinary coverage and reporting differs by carrier. The disciplinary reimbursement is not subject to the policy deductible.
Policy Coverage:
G. Regulatory Inquiry Extension
If a:
1. regulatory body;
2. state licensing board;
3. public oversight board; or
4. government agency,
having regulatory authority over the Insured’s Professional Services, first initiates an investigation of any Insured during the Policy Period which arises from Professional Services rendered on or after the Prior Acts Date and, such regulatory inquiry is reported to the Insurer during the Policy Period, the Insurer will reimburse the Named Insured for attorney fees, court and regulatory body costs incurred in responding to such inquiry, up to $25,000. This is the maximum amount the Insurer will reimburse, regardless of the number of such inquiries or of the number of Insureds involved in such inquiries, for all inquiries first initiated against the Insureds and reported to the Insurer during the Policy Period. Any notice the Insured gives the Insurer of such inquiry pursuant to Section VI., General Condition A.2., shall be deemed notice of a potential Claim. Any payments made regarding such inquiry will be in addition to the Limit of Liability and are not subject to the Deductible.
J. Disciplinary Proceedings Extension
The Insurer will reimburse the Named Insured up to $25,000 for each Insured and all Insureds in the aggregate, for attorney fees and other reasonable costs, expenses or fees paid to third parties (other than an Insured) resulting from any one Disciplinary Proceeding first received by the Insured during the Policy Period and reported to the Insurer during the Policy Period, and arising out of an act, error or omission in the rendering of Professional Services by such Insured in whole on or after the Prior Acts Date. The amount payable hereunder shall not exceed $25,000 despite the number of such proceedings reported to the Insurer during the Policy Period. Any notice the Insured gives the Insurer of such proceedings pursuant to Section VI., General Condition A.2., shall be deemed notice of a potential Claim. Any payments made regarding such proceedings will be in addition to the Limit of Liability and are not subject to the Deductible.
Policy Definition:
G. Disciplinary Proceeding means a forum in which a complaint alleging violation of any professional rule or professional misconduct is brought before a tribunal of competent jurisdiction which shall make a determination subject to appeal or other review or a final and enforceable determination as to whether such alleged rules or misconduct are to be the subject of discipline.
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 about disciplinary issues.
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Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080