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L Squared Insurance Agency Blog: prior acts date

View the latest blog posts from L Squared Insurance Agency.

Errors made during the dissolving and forming of law firms with legal malpractice claims-made insurance policies can cost attorneys coverage.  Too often the attorneys either ignore or misunderstand the need for making sure that their past acts are covered. READ MORE >>

Because attorney malpractice insurance is written on a claims made policy form the prior acts date is important to determining if there is coverage for an act that may have occurred many years ago.  The first three things that an insurer looks at to determine if the claims made policy covers the loss are: READ MORE >>

Professional Liability Insurance policies are normally written on a ‘claims-made’ policy form.  In its purest form, an unendorsed ‘claims-made’ policy only provides coverage for the current policy term for covered acts that occurred during and where the claim is made and reported during that policy term. READ MORE >>

Brief background Most property & casualty insurance policies are occurrence policies.  With an occurrence policy, the policy that is on the risk at the time that a covered act “occurs” is the policy that the claim will be settled under, regardless of when the act is reported (barring policy provisions and/or statute of limitations issues). READ MORE >>

Question from Attorney: Why do I need prior acts coverage for Attorney Malpractice Insurance?   Response: Lawyers Professional Liability Insurance is written on a “Claims made” policy form.  “Claim made” coverage in its purest form would only provide coverage for covered acts that that occurred and were reported during the policy period. READ MORE >>

Many states have statutes that limit the time to file an action against a lawyer.  The statutes many times have statements in them when a person would responsibly know an error was made.  Or for example, in Michigan, plaintiffs have 6 years after the date the alleged malpractice was committed to bring suit regardless of when it was discovered. READ MORE >>

There is a major key difference between claims-made vs occurrence insurance policies. Most professional liability policies (including all accountant and lawyer policies sold in the United States) are ‘claims-made’ or ‘claims-made and reported’. READ MORE >>

Most professional liability insurance policies have a Retro Active date or Prior Acts date, few have Full Prior Acts or FPA. Full Prior acts is a type of claims-made liability policy that does not contain a retroactive date and therefore covers claims arising from acts that took place at any time prior — regardless of how far in the past. READ MORE >>

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