The reality of attorney malpractice insurance policies is paying the deductible when a claim is made against the law firm. For an additional premium Insurers may offer for 1st dollar defense which addresses claims expenses for claims with no indemnity payment made or an aggregate deductible for multiple claims brought in any one policy year. But insurers may also have features built into their policies that reduce your deductible obligation. Valuable policy features mean that there is more than policy premiums that should be compared prior to making an insurer coverage decision. As every law firm is unique, policy features important to one insured are not important to another insured.
Deductible reducing features with the FLMIC (Florida Lawyers Mutual Insurance Company) policy are:
II. INSURING AGREEMENT
C. DEFENSE AND SETTLEMENT
1. We will defend any covered Claim or Suit brought against the Insured, even if the Claim or Suit is groundless, false or fraudulent. We will defend any non-covered Claim or Suit when such Claim or Suit is filed in conjunction with any covered Claim or Suit arising out of the same act, error or omission until the covered Claim or Suit is resolved by settlement, dismissal or final judgment.
2. We have the right to investigate, retain defense counsel and settle any Claim or Suit. We will not settle a Claim or Suit without consulting the Insured, but the lnsured’s consent to settle will not be required.
3. We will pay all costs of defending the Claim or Suit that do not exceed the applicable Limit of Liability. We will not defend a non-covered Claim or Suit except as set forth in paragraph 1. above. We will not defend or pay any Claim or Suit after the Limit of Liability has been exhausted in paying judgments, settlements, or Claims Expense. We will not defend or pay a Claim or Suit after We have deposited the applicable Limits of Liability of the Policy in a court of competent jurisdiction. If the Limits of Liability have been exhausted before a pending Claim or Suit has been settled. We will withdraw from defending the Claim or Suit and tender the defense to the Insured.
IV. LIMITS OF LIABILITY AND DEDUCTIBLE
C. DEDUCTIBLE
The annual aggregate deductible amount shall only be applied to Damages. Regardless of the number of Claims first made during the Policy Period and any Extended Claims Reporting Period, the total payable by the Insured shall not exceed the annual aggregate deductible amount as stated in the Declarations. The Limit of Liability will apply in excess of the deductible. We will pay covered Claims over the deductible, up to the unused Limit of Liability. If the Company has paid any amounts within the applicable deductible, the Insured agrees to reimburse Us the deductible amount within thirty (30) days after We notify the Named Insured of the amount due. All Insureds are jointly and severally liable for all deductible payments due the Company. The Company has the right to recover from the Insured, any fees and/or costs incurred by the Company in collecting the deductible.
D. NO DEDUCTIBLE FOR PRO BONO ACTIVITIES
The deductible will not apply to any Claim arising from any act, error or omission by an Insured for gratuitous legal services provided for a client who is referred to any Insured by a legal services office qualified for funding by the Federal Legal Services Corporation or sponsored by a voluntary bar association recognized by The Florida Bar.
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This blog is an excerpt from the policy. The complete policy along with applicable endorsements could impact the information provided above.
Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080