Attorney Malpractice InsurancePosted on Jan 15, 2016
Just the way all attorneys are not alike, all attorney malpractice insurance policies are not alike, either.
All such policies provide coverage for professional negligence which is legal liability resulting from professional services arising out of the delivery of legal services. The types of legal services include providing legal advice, acting as an arbitrator, notary, mediator, executor, trustee, administrator, guardian, conservator or in any fiduciary capacity when performed in connection with the practice of law.
But what else can be covered in a lawyers’ professional insurance policy?
Some companies offer network and information security offense coverage aka cyber liability coverage, data compromise, crisis event expense coverage, automatic acquisitions coverage and coverage for independent contractor attorneys hired to assist in the handling of cases.
Coverage can also be obtained (usually subject to sub-limits) for disciplinary proceedings and loss of earnings.
Another benefit that offered in an attorney malpractice policy is access to risk management resources which help to minimize liability exposures. This may take the form of a “hotline” phone number to call and discuss with experts in a confidential manner topics such as ethics, professionalism, client relationships, conflicts, and firm management.
Equally important as to what’s covered is what is not covered. These policies are “claims made” policies meaning that coverage is triggered when a claim is presented during the policy period or the extended reporting period after the policy has expired, regardless of when the “error” occurred. Like most insurance policies, coverage exists for negligent conduct, like missing a filing deadline, and not for intentional or criminal acts, such as fraud or diverting client funds for the attorney’s own use. Policies can also be drawn so narrowly that certain types of legal work are covered while other types are not.
The importance of providing accurate information on an application for lawyers’ professional insurance cannot be overstated. This holds true for both an initial application as well as a renewal application. If an attorney is aware of an issue with a client or a case that could lead to a claim of professional negligence, this must be disclosed on the application since insurance companies define “claim” to include a potential claim. The consequences for failing to advise of a potential claim include disclaiming coverage and even rescission of the policy under the theory that the failure to disclose rises to the level of a material misrepresentation sufficient to justify voiding the policy in its entirety.