Lawyers Professional Liability Policies (LPL) are claims-made policies. With claims-made policies once the coverage expires, so does past acts coverage. With certain policies an attorney may obtain a “free” non-practicing Extended Reporting Period Endorsement (ERP/ Retirement Tail) at retirement. The ERP endorsements extends to the LPL reporting period protecting the attorney’s past acts. But what if the attorney starts practicing law again? This may impact the ERP.
Read your previous LPL policy carefully. Starting to practice law may void your “free” retirement ERP. In other words, the attorney losses protection for previously covered past acts.
The following is an excerpt from the MedMarc/Proassuance policy dealing with a non-practicing ERP:
“6.4. EXTENDED REPORTING PERIOD ENDORSEMENT – NON-PRACTICING INSURED
6.4.1. A Non-Practicing Insured Extended Reporting Period Endorsement providing an unlimited extended reporting period will be issued and the premium and Deductible amounts shown in the Declarations will be waived (other than Deductible amounts the Insured becomes obligated to pay prior to the exercise of this provision) if an Insured lawyer:
a) dies;
b) becomes totally and permanently disabled and unable to engage in professional services as a result of accidental bodily injury, physical illness, or disease, and not involving the abuse of intoxicants or controlled substances, as certified by a physician acceptable to the Company; or
c) has been continuously insured with the Company for the immediately preceding three (3) years and is no longer engaged in professional services for which the Insured lawyer receives monetary or other financial compensation, as a result of total and permanent retirement or voluntary cessation of the full-time or part-time practice of law.
6.4.2. The Non-Practicing Insured Extended Reporting Period Endorsement does not extend the policy period or change the scope of coverage provided. The Non-Practicing Insured Extended Reporting Period Endorsement does not reinstate or increase the Limit of Liability on the policy. The Non-Practicing Insured Extended Reporting Period Endorsement does not provide coverage for claims that are covered under any other valid and collectible insurance, whether issued by the Company or any other insurer, or that would have been covered but for the exhaustion of the limit of liability of the other insurance or but for the failure of any Insured to comply with the terms and conditions of the other insurance.
6.4.3. If a Non-Practicing Insured Extended Reporting Period Endorsement is received as a result of retirement or disability and at a later date the Insured resumes rendering professional services, for any reason, in any jurisdiction, the Insured agrees that on that date coverage under the Non-Practicing Insured Extended Reporting Period Endorsement will terminate.”
While there is no standard LPL policy, the Medmarc policy language is typical. But there are other policies that starting work again may not terminate past acts coverage. An insurer may provide a new LPL policy with past acts coverage. But it would be wise to check on LPL coverage prior to restarting an attorney’s law practice. If an attorney takes advantage of the non-practicing ERP, the attorney needs to understand the consequences if attorney really does not want to fully “retire” for the practice of law as to Lawyers Professional Liability Insurance Coverage.
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Lee Norcross, MBA, CPCU
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L Squared Insurance Agency, LLC ® DBA in California as L2 L Squared Insurance Agency, License # 0L93416
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Lee@L2Ins.com
616-726-7080
