For Lawyers Professional Liability Insurance, there is not common meaning to the terms. “Full Prior Acts” is a term that is often misunderstood and changes from carrier to carrier as to what it means. Each Attorney Malpractice policy defines the terms used in the policy in its own unique way. The devil is in the details.
Many insureds assume that “Full Prior Acts”, actually means that the insured attorney is covered from the inception of their practice. While this might be true, it is not always the correct assumption. First you need to understand that for Lawyers Professional Liability Insurance, the policy is written for the firm. Any attorney that works for the firm are then covered under that policy. This is an important concept that many attorneys misunderstand. There may be separate endorsements listing the attorneys associated with the firm’s coverage or by the attorney malpractice insurance policy language that describes who is insured.
So given this, the term “Full Prior Acts” on an Attorney Malpractice policy would provide prior acts coverage back to the inception date of the firm. Now if the attorney, whether a solo or an multi-person firm, has only practiced at the current firm, then the attorney and the firm have coverage back to the inception date of his or her practice. If this statement is not true, then the attorney may have a coverage issue with a “Full Prior Acts” policy.
If a new firm is formed with members of a prior firm and the new firm does not meet the criteria as a successor firm, then again the term “Full Prior Acts’, only applies to the inception of the new firm. If the prior firm had not purchased an Extended Reporting Period Endorsement, there is no coverage for past acts associated with the prior firm. Given this circumstance the member attorneys need to make sure that there “new” attorney malpractice policy is properly endorsed to at least cover the individual attorneys. This introduces the concept of career coverage. Note in most instances career coverage only covers the individual attorney for work that the individual attorney has done.
If an attorney has left a firm and gets a new policy for his or her solo firm and the new policy states “Full Prior Acts”, generally coverage is only from the inception date of the new solo firm. Past acts from the prior firm are not generally covered unless there is a specific career coverage endorsement attached to the policy.
It is possible to get endorsements to cover the prior firm or attorneys past acts, but this needs to be done at the inception of the new coverage. Discovering this problem a year or so into the new firm’s insurance coverage, makes it very difficult to correct. Usually a “Career Coverage” or Specific “Predecessor Firm” endorsement or policy language is needed to address the issues with past acts from prior firms.
Without such endorsements, “Full Prior Acts” are “Full Prior Acts” only for the current law firm.
If all of this is confusing, when you are moving from your current firm and/or forming a new firm contact L Squared Insurance Agency to help you navigate through the Prior Acts conundrum and make sure that your new “Full Prior Acts” policy does not expose your assets.
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Lee Norcross, MBA, CPCU Managing Director, CEO (616) 940-1101 Ext. 7080 |
