Lawyers Professional Liability (LPL) coverage has distinct language that can confound the sharpest legal minds. LPL policies help you manage the risk of straightforward scenarios such as:
- Your partner commits an offense that you know nothing about.
- Hackers steal sensitive confidential data from your computer system.
- You need coverage that extends beyond the initiation date of your new policy.
- You get called before a Bar Association disciplinary hearing.
LPL policy terminology is not so clear. Understanding these plain-English explanations of common LPL language can help clarify your choice of an LPL provider:
Moonlighting
People with law degrees often get full-time jobs outside the legal system. If they’re still licensed to practice, they can earn money on the side taking cases and clients part-time. LPL policies can be written to provide moonlighting coverage to attorneys devoting, for example, less than 25% of their time to legal work.
Innocent party coverage
Perhaps you’re the partner in a three-lawyer firm. One of your partners commits a provably fraudulent act that you know nothing about. In the inevitable litigation, the insurer has to decide who gets coverage and who doesn’t.
Innocent party coverage in an LPL policy ensures that if you’ve done nothing wrong, you’re still insured when a co-worker or partner commits an offense that nullifies their policy protection.
Retroactive dates vs. full prior acts
If you switch LPL carriers, you might wonder about losing coverage for your retroactive date. LPL policies can be written to honor the retroactive date of your current insurance.
Full prior acts coverage, by contrast, doesn’t have a cut-off date. If a case you took five years ago triggers a lawsuit, full prior acts coverage will be there for you, whereas a retroactive policy dating to three years ago would not.
Security wrongful acts
This acts as your information technology coverage. A hacker may break into your network and steal, alter, or obstruct electronic data in a way that hurts your clientele. If you get sued, this language ensures you’ll get help covering the costs.
Duty to defend vs. non-duty to defend
This policy language affects how the insurer handles a claim. If the policy says the insurer has a “duty to defend,” it means the insurer is legally obligated to step in and help you defend against a claim.
A “non-duty to defend,” by contrast, means the insurer has the right to defend you, but doesn’t have to. They can choose to let you defend yourself and seek reimbursement.
Claims made vs. claims made and reported
A “claims made” policy insures against any claim made against you, regardless of whether the claim was initially reported to the insurer. A claim can be any wrongful act. It can be triggered by something as simple as an employee emailing you to say your partner has done something wrong and insisting that you do something about it. A claim does not necessarily mean litigation or arbitration.
“Claims made” language is so open-ended that insurers prefer not to use it. Instead, LPL policies are more likely to use “claims made and reported” language, which requires you to notify your insurer of any potential claim that could trigger coverage.
“Claims made and reported” language should spell out exactly what a claim is and how you should report it. This language typically includes a time frame that could be retroactive to a certain date on your current coverage. And it might extend beyond the end of your policy period.
Read this language closely and make sure you understand its provisions. (Find out more at “The Ins and Outs of Claims Made Coverage” at Insurance Journal.)
Subpoena assistance
Your LPL policy can cover the cost of hiring an attorney and preparing the documentation required to answer a subpoena. This language may be written to enable the insurer to hire its own attorneys to help with subpoena preparation. This coverage isn’t necessarily limited to suits against you; it can help if your documents get subpoenaed in a case against someone else.
Disciplinary proceedings and suspensions
Malpractice suits aren’t the only expensive litigation you could face. This language ensures you have defense resources if you get called before the State Bar Association.
Power of the Pen
This McGowan Program Administrators catchphrase reflects our ability to write an LPL policy that covers the risks unique to your business, experience, expertise, and caseload. Our decades of experience providing professional liability coverage help us streamline the process of providing quotes, outlining provisions, and binding coverage. Call us today and put our experience and knowledge to work. You can also get a quick online quote by clicking below:
