Preventing Gaps In Your Insurance Coverage
We cannot stress enough the importance of maintaining continuous coverage. As an attorney, one thing you do not want to do is take the risk of having a gap in your professional liability insurance coverage. The main reason is due to the claims-made and reported nature of the coverage.
Each year that you maintain continuous coverage, your prior acts date remains the date of your first original policy effective date. If a claim arises from work you have done in the past, your policy covers you back to that prior acts exclusion date. If, however, you have a lapse in coverage, your new prior acts date will be the effective date of the new policy.
How do you get gaps in your insurance coverage?
- You are late with your renewal process/payment and your current coverage lapses, or;
- Your policy was canceled for non-payment of premium and not reinstated, or;
- You terminated your policy and did not purchase an extended reporting period (ERP) endorsement (also called tail coverage), or;
- You joined a new firm and they did not pick up your prior acts, or;
- You switched carriers and the new carrier applied a new prior acts date.
What can you do to avoid gaps in your coverage?
- Always contact your agent before your policy expires to discuss your options.
- If you change firms, you can request to be added to the new firm's coverage with a prior acts exclusion date matching that of your previous coverage. This will be subject to the new firm's carrier's underwriting guidelines, and is up to the new firm as to whether they want to take on the exposure for your past acts. Talk with your new law firm as you transition to their coverage to discuss options. Never assume anything.
- Although your former firm may have some coverage for acts, errors and/or omissions of its former employees, this coverage is usually to the benefit of the former firm as the named insured, and not to you individually.
- Purchase an extended reporting period (aka tail coverage) even if you are changing professions. Past errors can follow you.