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 Zurich Insurance malpractice coverage is ‘Duty to Defend’, the disciplinary coverage is ‘Reimbursement’. Policy wording for disciplinary coverage and reporting differs by carrier. The disciplinary coverage is not subject to the policy deductible.
Declarations Page:
Item 3. Limit(s) of Liability each Policy Period:
C. Sublimit for Claim Expenses in connection with Disciplinary Proceedings: $ 25,000
Policy Coverage:
B. DISCIPLINARY PROCEEDINGS EXTENSION
Coverage afforded by this Policy will include Disciplinary Proceedings initiated during the Policy Period for an act or omission taking place prior to or during the Policy Period, provided that all of the following four conditions are met:
1. As a condition precedent to this coverage, the Insured shall give Notice to the Company of the initiation of a Disciplinary Proceeding as soon as practicable.
2. Upon a final resolution of the Disciplinary Proceeding, subject to Subsection II.B.3., the Company will indemnify an Insured for reasonable Claim Expenses as described in Subsection VIII.B.2. incurred to resolve the Disciplinary Proceeding. The Company will not indemnify any Insured for any monetary amount awarded or other relief, whether compensatory, equitable, or restitutionary in nature, ordered as a result of any Disciplinary Proceeding. The Company will not indemnify any Insured for such Claim Expenses in which the final resolution of the Disciplinary Proceeding results in the suspension or voluntary or involuntary revocation of the Insured’s license or right to perform Legal Services. The Company will have no obligation to pay such Claim Expenses other than upon the final resolution of the Disciplinary Proceeding as described herein.
3. The maximum Sublimit of Liability of the Company for Claim Expenses in connection with Disciplinary Proceedings will not exceed the Sublimit set forth in Item 3.C. of the Declarations in the aggregate regardless of the number of Disciplinary Proceedings. This Sublimit of Liability is part of, and not in addition to, the Limit of Liability set forth in Item 3. of the Declarations. Thus, if the act or omission that gave rise to the Disciplinary Proceeding results in a Claim, the Each Claim Limit of Liability and the Aggregate Limit of Liability set forth in the Declarations will be reduced by any payments made under this Extension. In the event that the act or omission that gave rise to the Disciplinary Proceeding does not result in a Claim, the Aggregate Limit of Liability set forth in the Declarations will be reduced by any payments made under this Extension. For the purpose of this Extension, no Deductible shall apply.
The Company shall not be obligated to pay any Claim Expenses, or to defend or continue to defend any Disciplinary Proceeding after the Sublimit of Liability, the Each Claim Limit of Liability, or the Aggregate Limit of Liability as set forth in Item 3. of the Declarations has been exhausted.
4. The Company shall have the right, but not the duty, to defend any Disciplinary Proceeding. The Insured may not incur any Claim Expenses in any Disciplinary Proceeding without the Company’s prior written consent, and such consent shall not be unreasonably withheld. The Company will not be liable for any Claim Expenses to which it has not consented. The Company has the right to associate in the defense of, and may investigate, any such Disciplinary Proceeding as it deems necessary.
Definitions:
H. Disciplinary Proceedings means a grievance or allegation filed with any professional entity charged with the responsibility to oversee lawyer disciplinary matters involving an act or omission by an Insured in the rendering of or failing to render Legal Services.
Disciplinary Proceedings shall not include any criminal proceedings or proceedings or hearings to determine the reasonableness of, or right or entitlement to, any fee or charge by any Insured.
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