Claim time is not the time to find out the attorney has no malpractice coverage for the reported claim. Attorneys that do work for clients where the attorney is involved with client management or ownership may run afoul of attorney malpractice policy exclusions. As no two client relationships are the same and no two policies are alike, where an attorney is doing legal for clients with an ownership or management role it is wise to read the entire policy. Where one malpractice insurance policy may provide coverage, the same client relationship with another malpractice policy excludes coverage. Depending on the attorney’s attorney/client relationship(s) there may be no coverage provided by the attorney malpractice policy.
The Starstone National Insurance policy excludes certain client ownerships, management and/or directors/officer legal work from coverage.
SECTION VI – EXCLUSIONS
This insurance does not apply to Claims:
B. Based on or arising out of the rendering of or failure to render Professional Services by any Insured in their capacity as an employee, owner, partner, stockholder, director or officer of any sole proprietorship, partnership or corporation or other business enterprise which is not defined as Named Insured, Predecessor in Business or Successor in Business;
F. Based on or arising out of Professional Services performed for any entity, other than the Named Insured, which at the time of the act, error, omission or Personal Injury giving rise to the Claim, was owned, controlled, managed or operated by any Insured. This exclusion shall not apply if at the time the Professional Services were rendered, the percentage of ownership in such entity, by any Insured, their spouse, or a cumulation of Insureds, did not exceed 10%;
J. Based on or arising out of an Insured acting or serving as an elected or appointed public official or employee of any governmental agency, body or subdivision. However, this exclusion shall not apply to any Claim made which arises solely and exclusively from the performance of Professional Services by an Insured for the governmental agency, body or subdivision;
SECTION VII – DEFINITIONS
F. Insured means any person or organization qualifying as an Insured under SECTION II – Insureds, of this policy. The insurance afforded applies separately to each Insured against whom a Claim is made or Suit is brought except with respect to the limits of liability.
G. Named Insured means the person or organization named in Item 1. of the Declarations Page.
Affected insured attorneys should not solely rely on the information provided in this blog. As facts may differ, determining malpractice coverage for each attorney client relationship requires a complete review of the malpractice policy. The facts that cause an alleged malpractice claim could also impact coverage.
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Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080