More than a few attorneys forget to take advantage of Disciplinary Coverage until it is too late. Attorney Malpractice Insurance policies that offer this coverage can be ‘Duty to Defend’ or ‘Reimbursement’. Even though the LMIC – California malpractice coverage is ‘Duty to Defend’, the disciplinary coverage is ‘Reimbursement’. Policy wording for disciplinary coverage and reporting differs by carrier. The disciplinary reimbursement is not subject to the policy deductible.
Policy Coverage:
2.3 Supplemental Coverages.
The Company will make the following supplemental payments:
(a) Disciplinary Proceedings: The Company will reimburse the Insured for reasonable costs and attorneys’ fees incurred by the Insured, through counsel selected by the Insured, in connection with any Disciplinary Proceeding brought against the Insured during the Policy Period and reported to the Company during the Policy Period. The Company’s liability in connection with all such Disciplinary Proceedings is limited to $50,000 per Policy Period. The Claim Expense Allowance shall not apply and no Deductible will be due with respect to such a Disciplinary Proceeding.
Policy Definition:
1.8 “Disciplinary Proceeding” means:
a proceeding, other than an initial inquiry, in which a complaint alleging violation of any disciplinary rule or other professional misconduct and seeking to impose discipline is brought before a state or federal licensing board.
Not taking advantage of this policy coverage does not make sense. Firms have a fear that reporting disciplinary complaints can impact their attorney malpractice insurance premiums. While too many disciplinary reported complaints that do not result in an issue can cause problems. Not reporting issues that may lead to a proceeding may impact your malpractice insurance should the same issue turn into a malpractice claim at a later date. The other issue is that once a year you may need to attest on the renewal application about disciplinary issues.
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Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080