Most attorneys understand that if they have an actual claim made against them or a lawsuit filed that they need to notify the insurance carrier immediately. It is also important for the attorney to know when they should put their professional liability insurance carrier on notice for a potential claim. Failing to report a potential claim may result in coverage being denied after the potential claim turns into an actual claim at a later date. To avoid this issue make sure that as a lawyer you have read the insurance contract and understand the requirements for claims reporting and notification to the carrier.
Most attorney malpractice policies require that the insured give notice when they reasonably expect a claim to arise from a matter. Some policies require only “claims” to be reported but include in the claims definition any circumstances that the insured could reasonably expect to arise to the level of a claim be reported.
There are generally time frames for claims reporting defined in the attorney malpractice policy. It is important to make sure that when you are aware of a matter that the claim is reported within that specified time frame. Generally in all cases it is important that the any potential claim be reported prior to the end of the current policy period regardless of whether you plan on renewing with the incumbent insurance malpractice carrier.
Just adding a claims supplement or including a claims report with the renewal application may not meet the claims reporting policy requirements. Many policies spell out the manner of when and where to report a claim. All require that the claim be in writing. Verbally mentioning the potential matter to your agent is not enough to meet this requirement. In generally it should include the name of the potential claimant, the time frame as to when the error may have occurred and the type of error that may be alleged. This notification should be sent in the manner as prescribed in your policy. If the manner of notification is not defined, then contact your agent to determine the proper procedure.
Certain circumstances that should be reported are:
1. The attorney has missed a filing deadline or failed to give timely notice.
2. The attorney has been threatened by the client that (s)he will be sued if the matter is not resolved.
3. The client holds the attorney responsible for a case result that did not meet the client’s expectations.
4. The attorney is aware of breaching an ethical duty to the client or a 3rd party.
5. The case is lost because of an error that was committed by the attorney during the course of the case.
6. The attorney is aware of some other error that was committed that could ultimately impact the client’s case.
Just because you might be able to “fix” the problem, it is not wise to withhold notification to your malpractice insurance carrier. If the “fix” tried does not work; the lack of timely notification or proceeding with the course of action that did not “fix” the matter could be enough for the malpractice insurance carrier to do a number of things; from denying coverage, to non-renewing coverage, to completely rescinding the Lawyers Professional Liability Insurance Policy.