Tuesday, February 10, 2009

Don't Forget To Review Your Malpractice Coverage

Allison Shields reminded me today to review my malpractice insurance as part of a comprehensive practice management plan. Sound advice on a topic that I think about once a year when renewal time arrives. Even though I rarely give the process more than cursory attention. Here are Allison's tips:
Is your malpractice policy a claims made policy? Claims made policies cover claims which are made during the policy period. This differs from an occurrence policy which covers any claim that was made as a result of an occurrence (i.e. the alleged malpractice) that took place when the policy was in effect.

Most homeowners and car insurance policies are occurrence policies, and those are the policies with which most people are familiar. But claims made policies are common for malpractice. If your policy is a claims made policy, once you become aware of a potential problem or claim, it is imperative to advise the insurer immediately. Failure to advise the insurer may mean a loss of coverage.

Does your policy have a prior acts date? This date may limit the claims covered by your policy even if the law firm become aware of the claim during the policy period. If the alleged malpractice occurred before the prior acts date, it won't be covered. If your policy contains such a provision, you will need to determine whether the date involves the whole firm or specific lawyers.

Do you have 'tail' coverage? This is important if you are switching carriers and don't have prior acts coverage with the new policy.

What are the exclusions to your policy? Doing work for free for friends or family? Taking on work in a new practice area that hasn't been previously disclosed to your malpractice carrier? Check your policy to see whether these items are covered under your policy.Does the policy you're purchasing cover all of your practice without exclusions for particular cases or practice areas? Does your policy's definition of professional services fit your firm and what it does?

Are you covered for all claims of malpractice, including those instituted as a result of a collections claim? An oft-cited reason why malpractice insurers don't like their policyholders to institute collections claims for unpaid fees is that the client often retaliates by instituting a malpractice claim. Sometimes those claims result in scrutiny of your billing procedures or the clarity of your communications with clients about your fee structure.

Are you covered for other activities related to your law practice, such as a real estate lawyer acting as a title agent, or any lawyer acting as a member of a board or bar association?

How much do you know about your malpractice carrier? Don't choose a malpractice carrier based upon price/premiums alone. Is your insurer reliable and experienced?

Will you will have the opportunity to choose or approve counsel should a claim be made against you? Your policy may give your malpractice insurer the exclusive right to choose the attorney or firm that will represent you.

Are your policy limits sufficient? what is the size of the potential judgment or value of the typical case or transaction being handled by the firm? If the numbers are high, you might want to consider higher limits. Consider the firm's assets to ensure that you're sufficiently protected.

Are your defense costs and expenses outside of the policy limits or included? Determine whether your policy limits include defense costs as well as liability limits. Review your deductible and be sure you know what it applies to - expenses or indemnity or both?

Having a malpractice policy isn't enough - make sure you know what that policy covers and where you may be vulnerable.
Please click here to read the original article.

Please be sure to visit www.hardinglaw.com, the website for the law firm of Harding & Associates, for more information on California family law.

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