Lawyers Professional Liability Insurance (LPL)and Accountants Professional Liability (APL) Insurance claims made coverage ends at the policy/coverage termination. Lawyers Professional Liability Insurance Policies (LPL&APL) are generally written for the firm and coverage extents from the firmto the employees and partners/members. Changes in firm makeup may constitute a material change to the firm andcould trigger coverage termination (caused by changes in partners/members,changes in ownership or dissolution). Whenthe firm makeup changes the carrier needs to be notified promptly to ensurecoverage continuation. Just becauseindividuals had coverage under the old entity does not automatically extendthat the old entity’s policy to coverage to individuals of the new entity.
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Term |
Concept/Definition |
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Prior Acts date |
Date from which insurance carrier will look to determine if a covered act occurred after that date. Generally there is no coverage for any act occurring prior to that. Based on the insurance carrier and coverage a Law Firm or Accounting Firm may have firm and/or an individual prior acts dates. |
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Predecessor Firm Coverage/Extension |
A Law Firm or Accounting Firm for which successor firm has acquired a majority of the assets and allows coverage to be extended on the successor firm’s policy to the predecessor firm. As coverage is written on behalf of the named insured firm without this extension coverage for covered acts prior to the inception date of the current firm likely will not be covered. If there is a predecessor firm it is important that it is named in the in-force coverage. |
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Career Coverage |
Extends coverage for an individual for individual covered professional acts that occurred prior to that individual joining the current firm. Note: If the individual did not performed the professional acts there is no generally coverage for that act. Only Firm Tail/ERP or predecessor firm coverage can provide coverage prior entity liability. |
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Individual Extended Reporting Period Endorsement (ERP/Tail) |
This endorsement becomes attached to the last in-force policy that the individual was associated with to extend the reporting period past the expiration date. The ERP term is normally stated as to the number of years or months that coverage is extended. As the name implies it only covers (much like career coverage) the individual’s personal covered professional acts. ERP’s can also be referred to as non-practicing tails, retirement tails, death & disability tails. |
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Firm Extended Reporting Period |
This endorsement is attached to the last in-force policy for the firm. It extends the reporting period beyond the coverage termination date. It is normally stated in months or years that coverage is extended. In many cases this is the only way to protect former members/partners. |
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ERP/Tail Cost |
Some insurance carriers offer individual ERP’s at no cost as long as the conditions are met. Not all carriers offer individual ERP’s for Lawyers or Accountants. If not the cost of the ERP is generally a multiple of the applicable in-force premium. It can range anywhere from .75 times to around 3.5 times depending on the length of time purchased and carrier. The cost is generally stated in in-force policy. It is fully earned and non cancellable by either party once put in force. |