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 QBE policy provides a nonpracticing ERP based on the following policy language:
IX. EXTENDED REPORTING PERIOD
B. Named Individual Extended Reporting Period
If during the Policy Period, any Insured permanently ceases performance of Professional Services as a result of retirement, becoming disabled, or death, such Insured or the Named Insured, or the Insured’s executor or estate, may request a Named Individual Extended Reporting Period Endorsement that will apply to such Insured; provided that, at the time this right could be exercised by or on behalf of an Insured, such Insured’s right to practice law has not been revoked, suspended or surrendered at the request of any regulatory authority for reasons other than that the Insured is disabled. Any request for such endorsement must be made in writing to the Insurer during the same Policy Period that the Insured retired, became disabled, or died, or within sixty (60) days of the ending date of such Policy Period, and include evidence of such retirement, disability, or death. The Named Individual Extended Reporting Period Endorsement will not apply to Claims made while this Policy is in force, any successive renewal of this Policy is in force, or any other Extended Reporting Period that applies to this Policy or any renewal of this Policy is in force, nor will it apply to Claims if any other insurance applies to the Claim. The Limits of Liability applicable to any Claim covered under such endorsement will be shared by all Insureds for whom such an endorsement has been requested in a Policy Period. There is no charge for the Named Individual Extended Reporting Period Endorsement for eligible Insureds who die or become disabled during the Policy Period and who permanently cease performance of Professional Services. There shall be an additional charge for the Named Individual Extended Reporting Period Endorsement for eligible Insureds who retire during the Policy Period unless the Named Insured has been continuously insured by the Insurer, any of its affiliated insurance companies, or this Program of Insurance, for at least three (3) consecutive years.
III. DEFINITIONS
I. “Insured” means:
1. the Named Insured;
2. any Predecessor Firm;
3. any natural person who:
a. is the sole owner of, or is or was a partner in, the Named Insured or Predecessor Firm;
b. was or is a member of the board of managers, director, executive officer, or shareholder of the Named Insured or Predecessor Firm;
c. was or is an employed lawyer or other employee of the Named Insured or Predecessor Firm;
d. was or is an Independent Contractor, or
e. was or is an Of Counsel attorney, provided that such person is acting within the scope of their duties on behalf of the Named Insured or Predecessor Firm.
4. As respects the liability of each Insured described above, (a) the heirs, executors, administrators, assigns and legal representatives of any such Insured in the event of death, incapacity or bankruptcy, and (b) the lawful spouse or a person qualifying as a domestic partner under the provisions of any applicable federal, state or local law of such Insured, but only for a Wrongful Act actually or allegedly committed by such Insured, to whom the spouse is married, or who is joined with the domestic partner.
K. “Named Insured” means the person or entity identified at Item 1 in the Declarations.
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.
CLICK HERE TO OBTAIN AN ATTORNEY MALPRACTICE QUOTE
Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080