My Lawyers Professional Liability Insurance Policy Lapsed Now What?
Why the concern about continuous “Claim-Made” coverage? Lawyers Professional Liability Policies (LPL) are “Claims-Made” insurance policies. When a “Claims-Made” insurance policy expires, so does your coverage for your past acts. This is the termination of continuous “Claims-Made” Coverage. If an “Occurrence” policy lapses (such as a Business Owners Policy (BOP)) coverage for claims occurring while the policy was in force continue. After placing a new “Occurrence” policy there is only a coverage gap for the days that an “Occurrence” policy was not in force.
Your prior acts coverage alternatives dwindle the longer a Lawyers Professional Liability policy is not in force:
- Within 2 to 10 days of lapsed coverage you might find an insurer willing to backdate and pick up your past acts, or your old incumbent insurer might still renew coverage. This is your best option.
- With 30 or 60 days of lapsed coverage, you may still (maybe) purchase the Extended Reporting Endorsement (ERP/Tail). And then for acts going forward obtain a new Lawyers Professional Liability Policy.
- If past acts are not a big concern, then obtain a new Lawyers Professional Liability policy without prior acts and roll the dice. Your prior past acts coverage is permanently gone.
- Once you are outside of the timeframe to purchase an ERP, certain surplus lines carriers may pick-up your prior acts with a “run-off” policy. Again for coverage of acts going forward purchase a new Lawyers Policy. If there happened to be past claims activity likely the “run-off” policy is not an option.
So the morale of the story is don’t expose your assets by letting your Lawyers Professional Liability policy lapse without obtaining an ERP.
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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
Managing Director, CEO
Lee@L2Ins.com
616-726-7080
