Since all Lawyer Professional Liability (LPL) policies are on a “Claims Made” format, Extended Reporting Coverage (ERC), also known as “TAIL” coverage, is an important consideration if you are planning to retire or otherwise cease the private practice of law. Most LPL policies provide the ability of the retiring lawyer to purchase adequate “TAIL” coverage. Many LPL policies even offer the “TAIL” coverage at no additional premium, under certain circumstances.
In order to qualify for the “TAIL” coverage at no cost, there are certain restrictions built into the policy. A typical restriction is that the Company will require the insured lawyer to have been insured by the same Company for (3) consecutive years before the attorney qualifies for No Cost Tail. The length of time varies, so it is important that you review your policy or you can contact Kaestner & Berry to determine the length of the waiting period your policy requires you to be insured by the same company in order for you to qualify. In addition, there may be other restrictions in your policy on your ability to qualify for this free benefit. For example, some policies require the attorney to be at least 55 years of age.
The policy also typically requires that the attorney has “retired or otherwise ceased the private practice of law”. Some policies include strong language which voids the “TAIL” coverage if the attorney practices law again after obtaining the TAIL coverage endorsement. However, it is important to keep in mind that if your policy contains the “otherwise cease the private practice of law” language, that you may qualify for No Cost Unlimited TAIL if you move into an industry or government position
For a solo practice, the ability to obtain “TAIL” coverage at no additional premium is an important consideration. However, in order to maximize the benefit, some planning is required.
For all law firms, but especially for a solo practice, it is important to plan for this benefit.
Kaestner & Berry is always available to assist you with this planning.