The reality of attorney malpractice insurance policies is paying the deductible when a claim is made against the law firm. For an additional premium Insurers may offer for 1st dollar defense which addresses claims expenses for claims with no indemnity payment made or an aggregate deductible for multiple claims brought in any one policy year. But insurers may also have features built into their policies that reduce your deductible obligation. Valuable policy features mean that there are more than policy premiums that should be compared prior to making an insurer coverage decision. As every law firm is unique, policy features important to one insured are not important to another insured.
Deductible reducing features with the Old Republic policy are:
II. LIMITS OF LIABILITY AND DEDUCTIBLE
C. Deductible
The deductible amount stated in the Declarations for each claim applies to each and every claim made against an Insured. It shall be paid by the Named Insured and applies to the payment of damages and claim expenses for claims both first made against the Insured and reported to the Company in writing during the Policy period. In the event the Named Insured fails to pay, the deductible shall be paid jointly and severally by all Insureds. The limits of liability set forth in the Declarations are in addition to and in excess of the deductible.
If a claim is based on or arises out of the rendering of eleemosynary (pro bono) legal services, no deductible will apply but only where at the time of retention, there was approval by the appropriate committee or lawyer within the Named Insured that the matter would be handled without compensation.
III. SUPPLEMENTARY PAYMENTS AND RISK CONTROL INCENTIVES
K. Early Claim Resolution
If a claim is settled or finally resolved within 364 days of the reporting of such claim to the Company, for an amount recommended to the Insured by the Company, then the Insured’s deductible, applying to that claim, will be reduced by 50%. In no event shall the amount of the deductible waived hereunder exceed $12,500.
However, the deductible will not be waived if the claim is resolved after the commencement of a trial in a court of law or binding arbitration or the first motion for summary judgment filed in a court of law by any party.
To the extent this provision is applicable, and the Insured has paid more than 50% of the deductible, the Company will reimburse the Insured the amount paid in excess of 50% of the deductible, up to $12,500, within 60 days of the final resolution of the claim.
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This blog is an excerpt from the policy. The complete policy along with applicable endorsements could impact the information provided above.
Lee Norcross, MBA, CPCU, CPIA
Managing Director, CEO
(616) 940-1101 Ext. 7080