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 (Retention) reducing features with the General Star National policy are:
V. LIMITS OF LIABILITY AND RETENTION
E. The Insurer shall only be liable for those amounts payable as Damages and/or Claim Expenses which are in excess of the Retention stated in Item 5 of the Declarations. The Retention shall apply separately to each Claim and shall be paid by the Named Insured. The Named Insured shall promptly make direct payments within the Retention to the appropriate parties as designated by the Insurer. The Insurer shall have no obligation to make payments within the Retention. If the Named Insured fails to pay the Retention, then all Insureds shall be jointly and severally obligated to pay the Retention. If the Insurer brings suit to collect such amounts, then the Insureds responsible to pay such
F. The Retention shall not apply to a Claim otherwise covered by this Policy arising solely out of Professional Services rendered on a pro bono basis, if, prior to the performance of such services, a partner, director or officer of the Named Insured approved of such services without a fee.
G. The Named Insured's Retention obligation shall be reduced by 50%, subject to a maximum reduction of $25,000, for any Claim in which the Insurer and the Named Insured agree to final settlement with all claimants during the initial mediation of such Claim or within 30 days after participation in such mediation. This reduction does not apply to any Claim resolved through arbitration.
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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.
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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
(616) 940-1101 Ext. 7080