Lawyers Professional Liability Insurance (LPL)
and Accountants Professional Liability (APL) Insurance claims made coverage ends at the policy/coverage termination. Lawyers Professional Liability Insurance Policies (LPL&APL) are generally written for the firm and coverage extents from the firm
to the employees and partners/members.
Changes in firm makeup may constitute a material change to the firm and
could trigger coverage termination (caused by changes in partners/members,
changes in ownership or dissolution). When
the firm makeup changes the carrier needs to be notified promptly to ensure
coverage continuation. Just because
individuals had coverage under the old entity does not automatically extend
that the old entity’s policy to coverage to individuals of the new entity.
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Term
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Concept/Definition
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Prior
Acts date
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Date
from which insurance carrier will look to determine if a covered act occurred
after that date. Generally there is no
coverage for any act occurring prior to that.
Based on the insurance carrier and coverage a Law Firm
or Accounting Firm
may have firm and/or an individual prior acts dates.
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Predecessor
Firm Coverage/Extension
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A
Law Firm or Accounting Firm for which successor firm has acquired a majority of
the assets and allows coverage to be extended on the successor firm’s policy
to the predecessor firm. As coverage
is written on behalf of the named insured firm without this extension
coverage for covered acts prior to the inception date of the current firm
likely will not be covered. If there
is a predecessor firm it is important that it is named in the in-force
coverage.
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Career
Coverage
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Extends
coverage for an individual for individual covered professional acts that
occurred prior to that individual joining the current firm.
Note: If the individual did not
performed the professional acts there is no generally coverage for that
act. Only Firm Tail/ERP or predecessor
firm coverage can provide coverage prior entity liability.
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Individual
Extended Reporting Period Endorsement (ERP/Tail)
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This
endorsement becomes attached to the last in-force policy that the individual
was associated with to extend the reporting period past the expiration
date. The ERP term is normally stated
as to the number of years or months that coverage is extended. As the name implies it only covers (much
like career coverage) the individual’s personal covered professional
acts. ERP’s can also be referred to
as non-practicing tails, retirement tails, death & disability tails.
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Firm
Extended Reporting Period
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This endorsement is attached to the last in-force policy for the firm. It extends the reporting period beyond the
coverage termination date. It is
normally stated in months or years that coverage is extended. In many cases this is the only way to
protect former members/partners.
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ERP/Tail
Cost
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Some
insurance carriers offer individual ERP’s at no cost as long as the conditions are
met. Not all carriers offer individual
ERP’s for Lawyers or Accountants.
If not the cost of the ERP is generally a multiple of the applicable
in-force premium. It can range
anywhere from .75 times to around 3.5 times depending on the length of time
purchased and carrier. The cost is
generally stated in in-force policy.
It is fully earned and non cancellable by either party once put in
force.
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