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 Travelers policy endorsement provides a nonpracticing ERP based on the following policy language:
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
OPTION TO REQUEST A NAMED INDIVIDUAL EXTENDED REPORTING PERIOD ENDORSEMENT
This endorsement changes the following:
It is agreed that:
The following is added to section VI. CONDITIONS:
OPTION TO REQUEST A NAMED INDIVIDUAL EXTENDED REPORTING PERIOD ENDORSEMENT
1. If during the Policy Period any Insured Person:
a. becomes disabled and permanently ceases performance of Professional Services;
b. retires and permanently ceases performance of Professional Services; or
c. dies,
such Insured Person or the Named Insured, or the Insured Person’s executor or estate may request a Named Individual Extended Reporting Period Endorsement that will apply to such Insured Person.
Coverage under the Named Individual Extended Reporting Period Endorsement will end if such Insured Person resumes performing Professional Services, recovers from their permanent disability, or the executor or administrator is discharged after their death.
2. Any request for such endorsement must:
a. be made in writing to the Company during the same Policy Period or Policy Year that the Insured Person became disabled, retired, or died, or within 60 days of the ending date of such Policy Period or Policy Year;
and
b. include evidence of such disability, retirement, or death.
3. The Named Individual Extended Reporting Period Endorsement will not apply to:
a. Claims made while this policy is in force, any successive renewal of this policy is in force, or any extended reporting period that applies to this policy or any renewal of this policy is in force; or
b. Claims if any other insurance applies to the Claim.
4. The limits of liability applicable to any Claim covered under such endorsement will be shared by all Insured Persons who qualify for such an endorsement in a Policy Year and will not exceed the Professional Services and Network and Information Security Offenses Coverage Limits listed on the declarations or $1,000,000 for all Claims, whichever is lower.
5. There is no charge for the Named Individual Extended Reporting Period Endorsement for eligible Insured Persons who become disabled during the Policy Period and who permanently cease performance of Professional Services, or die.
The charge for the Named Individual Extended Reporting Period Endorsement for eligible Insured Persons who retire during the Policy Period is $1,500 per Insured Person named in the endorsement. However, if the Named Insured has been continuously insured by the Company, or any of its affiliated insurance companies, for at least three years, no charge will be made for the endorsement.
IV. DEFINITIONS
J. Insured means any Insured Person, Named Insured, or Predecessor Firm.
K. Insured Person means any natural person who:
1. is the sole owner of, or is or was a partner in, the Named Insured or Predecessor Firm;
2. was or is a member of the board of managers, director, executive officer, or shareholder of the Named Insured or Predecessor Firm;
3. was or is an employee of the Named Insured or Predecessor Firm; or
4. was or is an Independent Contractor or Of Counsel attorney, provided that such person
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