Most lawyers recognize the need for Lawyers Professional Liability insurance, which protects against accidental errors or omissions that result in losses for clients. Unfortunately, many lawyers make the mistake of failing to fully understand a policy and its limitations, which leaves them exposed to risk. Attorneys should always consider the following two questions before purchasing a professional liability policy.
What Is the Basis for Claim Coverage?
Lawyers Professional Liability insurance typically features claims-made coverage. This provides coverage for claims that occur when the policy is active, even if a claim is not actually reported until after the policy expires. However, some policies require claims to occur and be reported during the coverage period. Less commonly, policies may cover claims that occurred before the policy was purchased but after a specified retroactive coverage date.
What Are the Limitations of the Policy?
Lawyers should also understand which claims and expenses a policy will not cover. Some liability policies cover general damages while excluding defense expenses or punitive damages. Most policies exclude knowing misconduct, such as intentional omissions. However, a policy with Innocent Insured coverage can protect a policyholder from liability for intentional misconduct committed by another policyholder, such as a firm partner.
Limiting Liability Through Awareness
Attorneys should make sure to understand these policy characteristics so they can ensure full and continuous coverage. Lawyers Professional Liability insurance polices can vary significantly, and professionals who assume otherwise may find themselves facing costly losses.