Lawyer Malpractice Insurance Disciplinary Coverage
Disciplinary coverage commonly found on admitted and certain non-admitted Legal Malpractice Insurance (LPL) policies. Insurers that do not offer disciplinary coverage as part of their standard policy will seldom endorse it to the policy.
What is Lawyer Malpractice Insurance Disciplinary Coverage?
Lawyer malpractice insurance disciplinary coverage protects legal professionals for defense costs from the financial consequences of disciplinary actions. If a lawyer faces complaints or investigations from the state bar or regulatory authorities, this coverage can help cover legal defense costs.
Why Do Lawyers Need Disciplinary Coverage?
While Malpractice insurance policies cover errors in legal practice, disciplinary coverage specifically addresses issues related to ethical violations, misconduct, or complaints filed with the state bar. As the legal profession is governed by strict rules and standards, lawyers can be subject to disciplinary investigations that, even if unfounded, may still be costly to defend.
With Legal Malpractice Insurance policies not being standard, this additional coverage appears under headings like ‘Additional Coverages,’ ‘Supplemental Payments,’ ‘Disciplinary Proceedings,’ ‘Regulatory Inquiry Extension,’ or related names, either in the body of the policy or as an endorsement to the policy.
Disciplinary Coverage is defense-only coverage; it will not indemnify fines or sanctions levied against the attorney or firm. Not considered as ‘Damages’ disciplinary coverage will not reduce your liability policy limits. Normally, there is no deductible. Limits for this coverage usually range from $5000 to $100,000 and can be for each incident, for the policy period, or a combination.
Duty To Defend or Reimbursement
Legal Malpractice Insurance policies provide disciplinary coverage that can be ‘duty to defend’ or reimbursement. With ‘duty to defend’ disciplinary coverage once reported to the insurer, the insurer is responsible for providing counsel and paying defense costs up to the limits stated. Prior to appointing counsel, the insurer may consult with the attorney to defend the matter.
Other Legal Malpractice Insurance policies offer ‘Reimbursement’ coverage for Disciplinary Matters. In this case, the attorney needs to find counsel to defend the matter and receive reimbursement for the cost of defense. Further limiting certain insurers’ liability, reimbursement disciplinary coverage policies may only pay defense costs if there is no finding against the attorney. Coverage that only pays for an ‘innocent’ attorney could lead to thousands of dollars of unreimbursed legal expenses.
When faced with a disciplinary matter, check your policy before responding or obtaining your own counsel. Insurers may decline coverage if notification of the matter occurs after adjudication. Non-timely reporting of disciplinary matters has led to law firms’ non-renewal. Failing to report a disciplinary matter can lead to a claim denial if the issue later develops into a malpractice claim.
Frequently Asked Questions About Business Insurance for Law Firms Lawyer Malpractice Insurance Disciplinary Coverage
What is Business Insurance for a Law Firm?
Business insurance for law firms is essential for protecting a law firm from various risks, not covered by lawyers professional liability insurance.
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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
