Attorney Malpractice Insurance Policies are claims-made and reported policies. When the coverage ends the ability to report claims for past acts ends at policy termination. Attorneys leaving private practice via retirement, becoming a judge or working in the private or public sector need to protect their past acts. Insurers will not renew attorney malpractice policies for attorneys that are no longer in private practice. Given this it is important for attorneys to protect their past acts once coverage ends. For solo practitioners and small firms that may close once the practitioner leaves, the nonpracticing Extended Reporting Period Endorsement/Retirement Tail (ERP) may be an answer.
Note: For attorneys closing or leaving their small firm to work at another law firm the nonpracticing Extended Reporting Period Endorsement/Retirement Tail (ERP) is not an option. Coverage for their past acts is outside of the scope of this blog.
Each insurer’s policy differs on requirements and wording for obtaining this valuable ERP endorsement at no or reduced cost. Careful planning by the attorney may save the attorney thousands of dollars. The ability to request an ERP differs by insurer but is time sensitive. Regardless of the insurer, the attorney must completely stop private practice to obtain the nonpracticing ERP.
The Florida Lawyers Mutual (FLMIC) policy provides a nonpracticing ERP based on the following policy language:
VI. EXTENDED CLAIMS REPORTING PERIOD
B. EXTENDED CLAIMS REPORTING PERIOD FOR ESTATE OF CERTAIN INSUREDS
If an Insured dies during the Policy Period, the Estate of the Insured shall be provided an Extended Claims Reporting Period of twenty-four (24) months duration, provided that:
1. Prior to the termination, cancellation or non-renewal of this coverage, the Named Insured has complied with all the terms and conditions of the Policy, including the payment of all premiums and/or deductibles when due; and
2. The Insured’s right to practice law in Florida had not been suspended or revoked and investigative or disciplinary proceedings which could result in suspension or disbarment have not been instituted by The Florida Bar; and
3. The Insured had been continuously covered by Us for at least five (5) consecutive years immediately prior to the death of the Insured; and
4. We are furnished with evidence satisfactory to Us of the date of death of the Insured; and
5. We receive a written request for an Extended Claims Reporting Period endorsement under this provision within sixty (60) days from the expiration of the Policy.
The Extended Claims Reporting Period Endorsement issued under this provision will extend the time for reporting Claims or Incidents which arise from an act, error or omission in Professional Services or Personal Injury which occurred on or after the Retroactive Date and prior to the end of the Policy Period, which are first made and reported to the Company during the Extended Claims Reporting Period.
An Extended Claims Reporting Period added under this provision does not extend the time period in which to exercise the option to purchase an Extended Claims Reporting Period of longer duration.
C. EXTENDED CLAIMS REPORTING PERIOD FOR DISABILITY OF CERTAIN INSUREDS
If an Insured becomes totally and permanently disabled and unable to practice law during the Policy Period, the Insured shall be provided an Extended Claims Reporting Period of twenty-four (24) months duration, provided that:
1. Prior to the termination, cancellation or non-renewal of this coverage, the Named Insured has complied with all the terms and conditions of the Policy including the payment of all premiums and/or deductibles when due; and
2. The Insured’s right to practice law in Florida had not been suspended or revoked and investigative or disciplinary proceedings which could result in suspension or disbarment have not been instituted by The Florida Bar; and
3. The Insured had been continuously covered by Us for at least five (5) consecutive years immediately prior to the disability of the Insured; and
4. Within sixty (60) days from the expiration of the Policy, We are furnished with evidence satisfactory to Us (a) that the Insured is and became totally and permanently disabled and unable to practice law during the Policy Period, and (b) that the Insured has resigned from The Florida Bar or has been placed on inactive status by The Florida Bar; and
5. We receive a written request for an Extended Claims Reporting Period endorsement under this provision within sixty (60) days from the expiration of the Policy.
The Extended Claims Reporting Period Endorsement issued under this provision will extend the time for reporting Claims or Incidents which arise from an act, error or omission in Professional Services or Personal Injury which occurred on or after the Retroactive Date and prior to the end of the Policy Period, which are first made and reported to the Company during the Extended Claims Reporting Period.
An Extended Claims Reporting Period added under this provision does not extend the time period in which to exercise the option to purchase an Extended Claims Reporting Period of longer duration.
D. EXTENDED CLAIMS REPORTING PERIOD FOR RETIREMENT OF CERTAIN INSUREDS
If an Insured retires from the practice of law, meaning that he or she permanently and totally ceases the practice of law during the Policy Period, the Insured shall be provided an Extended Claims Reporting Period of twenty-four (24) months duration, provided that:
1. Prior to the termination, cancellation or non-renewal of this coverage, the Named Insured has complied with all the erms and conditions of the Policy including the payment of all premiums and/or deductibles when due; and
2. The Insured’s right to practice law in Florida had not been suspended or revoked and investigative or disciplinary proceedings which could result in suspension or disbarment have not been instituted by The Florida Bar; and
3. The Insured had been continuously covered by Us for at least five (5) consecutive years immediately prior to the retirement of the Insured; and
4. Within sixty (60) days from expiration of the Policy, We are furnished with evidence satisfactory to Us that the Insured has totally retired from the practice of law; and
5. We receive a written request for an Extended Claims Reporting Period endorsement under this provision within sixty (60) days from expiration of the Policy.
The Extended Claims Reporting Period Endorsement issued under this provision will extend the time for reporting Claims or Incidents which arise from an act, error or omission in Professional Services or Personal Injury which occurred on or after the Retroactive Date and prior to the end of the Policy Period, which are first made and reported to the Company during the Extended Claims Reporting Period.
An Extended Claims Reporting Period added under this provision does not extend the time period in which to exercise the option to purchase an Extended Claims Reporting Period of longer duration.
I. DEFINITIONS
6. “Extended Claims Reporting Period” means a specified time period after the Policy Period to report covered Claims or Incidents.
9. “Insured” means any person or organization qualifying as an Insured herein under Section III. A. WHO IS AN INSURED.
10. “Named Insured” means the individual, firm or professional legal business entity named on the Declarations as Named Insured.
III. INSUREDS
A. WHO IS AN INSURED
Each of the following is an Insured to the extent set forth below:
I. The Named Insured as identified in the Declarations.
a. If the Named Insured is an individual, then only with respect to acts, errors or omissions in Professional Services in the law practice of that individual.
b. If the Named Insured is a professional legal business entity, then any lawyer, partner, officer, director, shareholder, or member of the Named Insured, but only with respect to acts, errors or omissions in Professional Services in the law practice of the Named Insured.
2. Any non-lawyer employee of the Named Insured, but only with respect to acts, errors or omissions in Professional Services in the law practice of the Named Insured.
3. Any lawyer serving as “of counsel” to the Named Insured but only with respect to acts, errors or omissions in Professional Services in the law practice of the Named Insured.
4. Any lawyer who was a partner, officer, director, shareholder, member or employee of or “of counsel” to the Named Insured or Predecessor Firm at the time the acts, errors or omissions on which liability is asserted occurred but only with respect to acts, errors or omissions in Professional Services in the law practice of the Named Insured or Predecessor Firm as a partner, officer, director, shareholder, member or employee of or “of counsel” to the Named Insured or Predecessor Firm.
No coverage is provided under the Policy for any partner, officer, director, shareholder, member, employee or “of counsel” for acts, errors or omissions occurring before joining the Named Insured, unless coverage for prior Incidents is purchased and the appropriate Retroactive Date is shown.
The Named Insured will be deemed the agent of all Insureds in regard to all matters relating to the Policy.
Switching insurers near retirement to save a few dollars may cost an insured attorney thousands of dollars to buy the same protection. Planning retirement or a transition out of private practice should be discussed with your malpractice insurance agent prior to ending private practice when possible.
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Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080