Commercial or Personal lines Umbrella Coverage is a must for any person or entity that is trying to protect their assets. After you have worked hard to acquire you assets, you do not want them all taken away because you were uninsured or underinsured. Not only does an Umbrella step in and provide liability coverage where general liability and auto insurance do not, it is a relatively inexpensive way to increase your general liability limits.
Unfortunately, Umbrellas (Commercial or Personal) do not provide any coverage for Attorney Malpractice. Umbrella policies actually specifically excluded most professional liability insurance including Attorney Professional Liability Insurance. Umbrella policies mostly are “Occurrence policies” where Attorney Malpractice policies are “Claims Made.” Even if there were not the exclusions, mixing Occurrence and Claims Made coverage on the same exposure will lead to coverage gaps. If you have an Umbrella policy thinking you have extended coverage for Attorney Malpractice, when the claim comes you will rained on.
Excess Liability Policies that are specifically designed to provide additional “claims made” coverage for Lawyer Professional Liability Insurance Policies. Unlike an umbrella policy an excess liability policies to will not fill liability coverage gaps. Care also must be taken because there are generally 3 variations of excess insurance coverage:
1. The excess policy that has its one definitions of what is and is not covered is one variation. Only after a through reading of both the primary and excess policies will you be able to determine was is and is not covered. Do not be surprised if there are not hidden coverage gaps.
2. An Excess Policies that “states” that it is “following form”, but has endorsements or policy wording that takes away coverage in certain instances.
3. The “True” “following form” policy. This policy makes it clear that it is adopting the terms and conditions on the primary policy and there are not additional endorsements that remove coverage.
Even with the true “Following Form” policy one must be careful about prior acts dates. In some cases you end up with a split retro. This can be painful, is you are looking for coverage on a large claim only to find out that the excess policies retro date excludes coverage for this act.
So for many law firms that are trying to obtain higher limits to protect their assets, they need the Umbrella for the general liability coverage and the Excess Policy for the Attorney Malpractice Coverage.