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 Golden Bear policy are:
IV. INSURED CHOICE OF DEDUCTIBLE OR SELF-INSURED RETENTION
The Insured’s election to apply either a Deductible or a Self-Insured Retention to each Claim is stated in the Declarations.
A. Deductible
If the Insured has elected a Deductible, the Insured is responsible for payment of the Deductible. The Company shall notify the Insured when it has incurred Loss or Claims Expenses in excess of the Deductible. The Insured shall then remit the Deductible amount to the Company.
B. Self-Insured Retention
If the Insured has elected a Self-Insured Retention, the obligation of the Company to pay Loss or Claims Expenses applies only to Loss or Claims Expenses in excess of the Self-Insured Retention. The Limits of Liability set forth in the Declarations is in addition to and in excess of the Self-Insured Retention. If the total of Loss and Claims Expenses paid for any Claim is below the Self-Insured Retention, this Policy does not apply, and the Company will have no duty to pay Loss or Claims Expenses for the Claim. If the Insured is able to settle a Loss and obtain a signed release before the end of the Policy Period, in which the Insured was first notified of the Claim, the Insured can report the Claim any time prior to the expiration date noted on the Declaration page or on the Company renewal Application, whichever is earliest.
V. CONDITIONS
A. Settlement of Claim
The Company shall have the right and sole discretion to conduct any investigation it deems necessary. The Company will not settle a Claim without the mutual consent of the Insured it deems reasonable and necessary, unless the Insured cannot be located or contacted by mail or other reasonable standards of due diligence by the Company. If an Insured refuses to consent to a settlement recommended by the Company and acceptable to the claimant and elects to pursue the defense of such Claim or continue proceedings in connection with the Claim, then the Company’s liability for damages and Claims Expenses relating to that Claim will not exceed the total amount for damages and Claims Expenses which the Company would have paid at the time of the Insured’s refusal.
If the Company and the Insured agree to the final settlement of a Claim with the claimant during the initial voluntary mediation of that Claim or within thirty (30) days after participation in such mediation, the Insured’s Deductible obligation for such Claim will be reduced by fifty percent (50%) or a maximum reduction of $15,000, whichever is greater. Deductible payments made prior to the application of the above credit will be reimbursed within sixty (60) days of the resolution of the Claim. This reduction does not apply to any Claim resolved through voluntary or involuntary arbitration.
D. Reimbursement to the Company
If the Insured fails to pay the Deductible or the Self-Insured Retention, and if the Company, in the exercise of its discretion elects to and without any obligation to do so, pays any amount within the Deductible or the Self- Insured Retention, or pays any amount in excess of the applicable Limits of Liability, the Executive Officers shall be individually liable to the Company for any and all such amounts and, upon demand, shall pay such amounts to the Company.
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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