Questions to ask when shopping for Legal Malpractice E&O Coverage

WHAT IS THE FINANCIAL RATING OF THE
INSURANCE CARRIER?
You can look to independent rating companies
such as A.M. Best to determine the financial
strength of any carrier being considered.
WHAT LEGAL SERVICES ARE COVERED IN
THE POLICY?
Confirm that all of the types of legal services
rendered by your lawyers will be covered under
the policy including, for example, services
provided as a notary public, arbitrator or
mediator, title insurance agent, etc.
WHO IS COVERED UNDER THE POLICY?
Check the definition of “you,” “your” or “insured”
to confirm that all those doing work on behalf
of an attorney or the firm are covered, including
past and present partners, “of counsel” and non-
lawyer employees.
WHAT OTHER COVERAGE DOES THE
POLICY PROVIDE IN ADDITION TO THE
BASIC LEGAL SERVICES COVERAGE?
Check to see if the policy provides
supplementary payments coverage for lost time
associated with a claim. Some policies provide
this coverage, and others do not. Also confirm
that the limits provided are sufficient to cover
your lost income, and note if the provision
provides a separate limit so that the policy limits
are not eroded by claims.
WHEN IS THE DEDUCTIBLE OWED?
Under most policies, the deductible becomes
due when the carrier pays the first dollar
on a claim. However, if “first-dollar defense
coverage” is included or purchased, then the
insurer pays for all or some part of defense costs
before any deductible is owed. If the limits of this
first-dollar defense coverage are not reached,
you don’t pay a deductible. First-dollar defense
coverage can save you money, especially on
smaller claims that are settled or dismissed
before significant defense costs are incurred.
HOW MANY AND WHAT KIND OF
EXCLUSIONS LIMIT THE POLICY
COVERAGE?
Examine exclusions in the policy to determine
how they will limit your coverage. All insurers
have some exclusions in their policies but some
insurers’ policies have broader exclusions than
others.
DOES THE CARRIER OFFER RISK
MANAGEMENT SERVICES AND TOOLS
THAT ADD VALUE TO THEIR PRODUCT?
Training and education services can be costly
to your firm. Determine if your insurance carrier
offers these services without charge as that
can equate to substantial savings both now and
down the road.
ARE DEFENSE COSTS FOR DISCIPLINARY
PROCEEDINGS COVERED BY THE POLICY?
Defending a disciplinary proceeding can be
costly. Some insurance policies either provide
no coverage for disciplinary proceedings
whatsoever, or provide insufficient limits to allow
for a vigorous defense. Check to ensure that your
policy generously covers disciplinary matters
so that attorneys and the firm are more fully
protected.
ARE THERE ANY PROVISIONS THAT WILL
REDUCE THE DEDUCTIBLE AMOUNT
OWED?
Some insurance carriers provide you with ways
to reduce deductibles (such as a provision that
cuts the deductible in half when the claim is
contained within the deductible). This can mean
real savings for your law firm in the event of a claim.
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