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 Berkley policy are:
II. Limits of Liability and Deductible
C. Deductible
1. If option A. “Aggregate Deductible – All Claims” is selected in Item 6. of the Declarations, the Deductible amount stated in Item 6. A. is the total amount of the Insured’s liability for all Claims first made and reported to the Insurer during the Policy Period. The Deductible shall be paid by the Named Insured, or upon the Named Insured’s failure to pay, jointly and severally by all Insureds against whom the Claim is made. The Limits of Liability set forth in the Declarations are in addition to and in excess of the Deductible.
2. If option B. “Each Claim Deductible” is purchased in Item 6. of the Declarations, the Deductible amount shall apply to each and every Claim first made and reported to the Insurer during the Policy Period. The Deductible shall be paid by the Named Insured, or upon the Named Insured’s failure to pay, jointly and severally by all Insureds
a. against whom the Claim is made. The Limits of Liability set forth in the Declarations are in addition to and in excess of the Deductible.
3. If option i. “Deductible applies to Damages and Claim Expenses” is selected as indicated in Item 6. of the Declarations, the Insurer shall be liable for the amount of Damages and / or Claim Expenses arising from a Claim which is in excess of the Deductible amount stated in Item 6. of the Declarations.
4. If option ii. “Deductible applies only to Damages” is purchased as indicated in Item 6. of the Declarations, the Insurer shall be liable for the amount of Damages arising from a Claim which is in excess of the Deductible stated in Item 6. of the Declarations. No Deductible shall apply to Claim Expenses.
5. The Insurer has the right, but not the obligation, to advance any Damages and / or Claim Expenses within the Deductible. Any funds advanced by the Insurer shall serve to reduce the Limits of Liability. If the Insurer brings suit to collect the Deductible, then the Insured responsible to pay the Deductible also shall pay the legal fees, costs and expenses incurred by the Insurer to collect the Deductible.
F. Risk Management Incentives
Mediation
If mediation of a Claim takes place either without institution of arbitration proceeding or service of suit or within 60 days of the institution of such proceedings or service of suit, and such Claim is ultimately resolved for an amount acceptable to the Insured and the Insurer by the process of mediation, the Insured’s deductible, applying to the Claim, will be reduced by 50%. In no event shall the amount of the deductible waived hereunder exceed $10,000.
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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.
Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080