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 AMGuard policy’s malpractice coverage is ‘Duty to Defend’, the disciplinary coverage is ‘Reimbursement’. Insurer’s wording for disciplinary coverage and reporting differs by carrier. The disciplinary reimbursement is not subject to the policy deductible.
Policy Coverage:
D. Disciplinary Proceedings
Coverage afforded by this policy will include Disciplinary Proceedings subject to the following provisions:
1. As a condition precedent to this coverage, the Insured shall immediately give notice to the Company of the initiation of a Disciplinary Proceeding.
2. Solely for the purpose of this section, the Insured will have the right and duty to defend the Disciplinary Proceeding; provided, however, that the Company will have the right to effectively associate in the defense and investigation of the Disciplinary Proceeding and be kept fully apprised as to the status of the Disciplinary Proceeding.
2. Solely for the purpose of this section, the Insured will have the right and duty to select counsel subject to the Company’s prior written consent, which consent will not be unreasonably withheld.
4. Upon a final resolution of the Disciplinary Proceeding, subject to Section 5 below, the Company will indemnify an Insured for reasonable defense costs incurred to resolve the Disciplinary Proceeding. The Company will not indemnify an Insured for any
Damages incurred as a result of any Disciplinary Proceeding. The Company will not indemnify any Insured for the defense costs in which the final resolution of the Disciplinary Proceeding results in the suspension or revocation of the Insured’s license or right to practice law. The Company will have no obligation to pay defense costs other than upon final resolution of the Disciplinary Proceeding as described herein.
The maximum limit of liability of the Company for defense costs in connection with the Disciplinary Proceedings will not exceed $25,000 in the aggregate regardless of how many Disciplinary Proceedings occur during the Policy Period and regardless of any other fact, circumstance or situation. The limit of liability is part of, and not in addition to, the limit of liability shown in 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 shown in the Declarations will be reduced by any payments made under this section.
Policy Definition:
Q. DISCIPLINARY PROCEEDINGS means a grievance or allegation involving an act or omission made against an Insured to any professional entity charged with the responsibility to oversee disciplinary matters.
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