1. Claims Made vs. Occurrence — Lawyer’s malpractice insurance is written as a claims made policy, which is different than an occurrence-based policy. A claims made policy means that when you report a claim it is covered by the current policy that is in effect when the matter is reported to the carrier. For example, if you have a professional error that occurred in 2020, but you did not get notice of the claim until 2023, when you report that claim in 2023 it will be covered under your current policy. As opposed to an occurrence- based policy, where if an error occurred in 2020 it would be covered under the 2020 policy. An occurrence policy is not available for lawyer’s malpractice insurance.

2. What is a retro date and why is it important? – The retro date, sometimes called the retroactive date of inception, or prior acts date, is very important in a lawyer’s malpractice insurance policy. This is the earliest possible date for which an insurance policy will cover an incident or dispute. For example, if the retro date on your policy goes back to 01/01/2020, you will not have coverage for an act that occurs before this date. So, if there was an incident that took place in 2019, even if it was reported after 2020, you would not have coverage for this incident because it occurred before the 01/01/2020 retro date. It is important to keep the same retro date in your policy, so you do not have any gaps in what is covered.

3. Reporting Claims – Because lawyer’s malpractice insurance is written only on a claims made policy, it is extremely important to report all claims or potential incidents as soon as possible. Claims made policies come with stringent reporting requirements that could see an insured lose coverage if they do not comply with these requirements. Typically, insurance companies will give between 30-60 days to report a claim after you have received notice. This includes potential incidents and bar complaints that could reasonably give rise to a claim. For example, if you receive notice of a complaint from a client that might lead to a claim in the future, but you do not report that to your insurance carrier, you may lose coverage for that incident. Additionally, if you have notice of a potential incident but fail to report that on your renewal application, you will lose coverage for that incident after the policy has been renewed. That is why it is extremely important to report all incidents or complaints that may give rise to something more serious in the future.

The operation of your business is important to you. The purchase of a malpractice insurance policy is an important part of the overall operation of your firm.

As outlined in this article, malpractice insurance is much more complicated than you may think. The experts at Kaestner & Berry will assist you in making sure the coverage that your firm needs is there when you need it.