When To Report A Claim
All Lawyer Professional Liability (LPL) policies are on a “Claims Made Basis”. To be more specific, this means the coverage is typically triggered when the claim is made against the insured and reported to the appropriate carrier.
Insurance underwriters are obviously interested in not providing coverage to an attorney who buys coverage after he or she is already aware of a claim or a potential claim. The carriers address this risk in two ways.
The application always asks an attorney if he or she is aware of a claim or potential claim that has not yet been reported. Under Missouri law, if this is presented as a “representation” in the application, the insurance company must proof the misrepresentation was false and material.
A “Claims Made” policy also provides there is no coverage for claims known but not reported during the policy period. This is set forth in the coverage section of the policy. As a result the insurance company does not have to demonstrate “prejudice” with this coverage defense. See Continental Casualty v. Maxwell 999 S.W.2d 882 (MO app 1990).
The bottom line is that the failure to report a claim or a matter that may give rise to a claim during the policy period that the attorney becomes aware of the matter, will jeopardize the coverage.
Contact Kaestner & Berry if you have any questions.