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 Swiss Re policy are:
The deductible, as stated in the Declarations, shall apply to each CLAIM and shall be paid by the NAMED INSURED. The reduction in deductible applies to per claim deductibles and aggregate deductibles. The deductible shall be first applied to all CLAIMS EXPENSES with the remainder, if any, being applied to LOSS. CLAIMS EXPENSES shall be included within the deductible and the limit of liability and not in addition thereto. Payment of the deductible shall be made by the NAMED INSURED within thirty (30) days of receipt of demand by the Company. No deductible shall apply to any CLAIM that results from eleemosynary PROFESSIONAL SERVICES. In the event that a CLAIM is eligible for more than one deductible reduction incentive below, no deductible will be reduced by more than 50%, not to exceed $12,500.
1. The deductible, as stated in the Declarations, will be reduced by 50% for any CLAIM, not to exceed a reduction of $12,500, if any INSURED delivered a written communication to the identified client(s) prior to the commencement of legal services for the specific matter that forms the basis of the CLAIM and the written communication was timely countersigned and returned to the INSURED, provided that the written communication contains all of the following:
a. a clear and accurate identification of the client(s);
b. a detailed description of the scope of the services to be rendered;
c. any activities excluded from the scope of engagement;
d. the fees for service;
e. specifics of any client responsibilities; and
f. any written statement required by the Rules of Professional Conduct.
A written communication that refers to a general engagement and not a specific task/service/matter will not qualify for this deductible reduction. The services detailed in the written communication must be related to the CLAIM. If the scope of the engagement changes, the INSURED must have communicated the change in scope to the client(s) in writing at the time the parties agreed to the change in scope. If the Insured has paid more than 50% of the deductible, the Company will reimburse the Insured the amount paid in excess of 50% of the deductible within sixty (60) days of receipt by the Company of written request by the INSURED.
2. The deductible, as stated in the Declarations, will be reduced by 50% not to exceed a reduction of $12,500 for each CLAIM that is resolved within 365 days of receipt by the Company of the CLAIM, or within 365 days of receipt by the Company of the POTENTIAL CLAIM, whichever occurs first, and for an amount recommended to the Insured by the Company, except if the CLAIM is resolved after the commencement of:
a. a trial for the full adjudication of the CLAIM in a court of law;
b. a motion for summary judgment by any party; or
c. a hearing in binding arbitration of the CLAIM.
If the CLAIM is not fully and finally resolved within the period of time described above, there shall be no reduction in the deductible. If the CLAIM is resolved and the Insured has paid more than 50% of the deductible, the Company will reimburse the Insured the amount paid in excess of 50% of the deductible within sixty (60) days of receipt by the Company of written request by the INSURED.
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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, CPIA
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