Professional Liability Insurance Information
PROFESSIONAL LIABILITY INSURANCE - We place all types of Non-Medical Professional Liability Insurance. Below are some issues to consider for Lawyers Professional Liability, and Miscellaneous Professional Liability / Technology Errors & Omissions Insurance.
I. LAWYERS PROFESSIONAL LIABILITY (LPL) INSURANCE - we place LPL coverage for firms large and small; including those with difficult Areas of Practice including: Intellectual Property, Mass Tort, Pharmaceuticals, etc.
1. Services Outside of North American - In many foreign countries, an alien insurer cannot defend and pay claims. In order to protect your firm, it is essential for your Lawyers Professional Liability policy to expressly specify something along the lines that:
…where we (the insurance company) are unable to provide a defense or pay DAMAGES….because of a law, rule, regulation or other prohibition, that we (the insurance company), will advance to your firm, on a current basis, reasonable defense costs that your firm incurs; and, will indemnify the Insureds for Damages when determined on a final judgment or agreed settlement.
2. Severability - Again, this is a big item for any liability policy. There is Severability of the Application - which protects Innocent Insureds in the event that information was misrepresented or concealed during the application process. There is also Severability of the Intentional Acts Exclusion(s) which protects Innocent Insureds in the event that another Insured committed an intentional, fraudulent or similar act. And; Severability for Breach of Policy Conditions - which provides protection in the event that an Insured breaches its Duties and Responsibilities under the policy. These are essential. You need to contact us if your or your client’s policy is lacking.
3. Career Coverage - Some LPL policies provide coverage for Claims brought against a firm attorney for actual or alleged Wrongful Acts that were committed prior to the attorney being affiliated with its present firm. While providing Career Coverage can be beneficial in certain circumstances; as a rule, it generally is not. Furthermore, it is not unusual for a law firm to be unaware that their LPL policy provides Career Coverage. Recognition as to whether your law firm’s policy operates in this manner is essential. If your policy provides this coverage and it is not desired such coverage can be eliminated by Endorsement. Contact us if you need assistance in determining whether or not Career Coverage is provided by your LPL policy.
4. Investment Advice Exclusion - LPL policies often contain an Investment Advise Exclusion. How the Exclusion is constituted is the determining factor as to whether or not to request that your insurer remove the Exclusion in its entirety.
Problematic issues include:
(i) Broad Exclusionary Preambles - language similar to the below renders the Exclusion absolute. There is no wiggle room.
...based upon or arising out of, directly or indirectly, resulting from, in consequence of or in any way involving "Investment Advice"….
(ii) Besides a unfavorable preamble as above, what exact “Investment Advice” activity is excluded from coverage? - Obviously, attorneys provide advice to their clients’ all day long. Therefore, in addition to an adverse preamble, exclusionary language should be eliminated which precludes coverage for claims involving:
a. recommendations involving investments; and
b. the performance of an economic analysis of an investment.
This is because while an attorney may not be providing “Investment Advice” per se, it is not unusual for lawyers to render opinions regarding the viability of asset purchases, etc. For example, whether present Land Use/Zoning Restrictions permits a client’s proposed development plans; or advice provided to a client whether it is likely or not that a municipality will modify existing Zoning Restriction so as to permit the client’s desired development of the real estate.
5. Vicarious Liability Coverage - This is a simple concept. While your LPL policy provides coverage for Claims resulting from actual or alleged Wrongful Acts committed by an INSURED (your firm’s attorneys); does your policy expressly state that coverage is also provided for Wrongful Acts committed by persons or entities for whom you are responsible? The lack of Vicarious Liability coverage could prove problematic. Your or your client’s policy should be modified accordingly.
6. Trustee Work - It is customary for members of law firms to serve as Trustees and it is customary for LPL policies to cover such Professional Services:
(i) if incidental to the practice of law; but only if;
(ii) such services are performed in the name or on behalf of the Firm and some or all of the fee, if any…inures to the benefit of the Firm.
It is not unusual for some law firms to permit partners to provide Trustee services in their own name without any fee inuring to the benefit of the firm. If that is the case, an appropriate modification to the definition of Professional Services is obviously essential.
7. Completion of New Attorney Form - As part of the decision-making process as to whether to hire a new attorney, it is essential that your firm be aware of any Claims or Potential Claims involving the prospective hire. A very simple way to determine this is to have the prospective hire complete a New Attorney Form - this way, when a New Attorney Form is required by your LPL insurer prior to the next renewal of your policy there will not be any surprises.
II. MISCELLANEOUS PROFESSIONAL LIABILITY (MPL) INSURANCE and TECHNOLOGY ERRORS & OMISSION (Tech E&O) INSURANCE - we place MPL and Tech E&O coverage for enterprises large and small.
(i) We are experienced in creating Tech E&O policy solutions for firms with vertically integrated exposures, i.e. firms providing all or some of the following services: R&D, System/Product Design, Manufacturing/Fabricating, Process Engineering, Installation and Servicing of Technology Products.
(ii) Similarly, for MPL policies, we can tailor a policy wording to cover firms that are engaged in providing multiple, varied, as well as unrelated Professional Services to clients in various industry groups. Depending on the risk profile, these diverse Service firms may be better suited for their Professional Liability coverage to be designed under a manuscript Contractors Professional or Architects & Engineers Professional Liability policy format instead of an MPL platform.
Important Matters to Consider:
1. Severability - Again, this is a big item for any liability policy. There is Severability of the Application - which protects Innocent Insureds in the event that information was misrepresented or concealed during the application process. There is also Severability of the Intentional Acts Exclusion(s) which protects Innocent Insureds in the event that another Insured committed an intentional, fraudulent or similar act. And; Severability for Breach of Policy Conditions - which provides protection in the event that an Insured breaches its Duties and Responsibilities under the policy. These are essential. You need to contact us if your or your client’s policy is lacking.
2. Vicarious Liability Coverage - This is a simple concept. While your Tech E&O or MPL policy provides coverage for Claims resulting from actual or alleged Wrongful Acts committed by an INSURED; does your policy expressly state that coverage is also provided for claims resulting from the actual or alleged Wrongful Acts committed by persons or entities for whom you are responsible? The lack of Vicarious Liability coverage could prove problematic. Your or your client’s policy should be modified accordingly.
3. Cost Estimate Exclusion//Cost Overrun Exclusion - This type of Exclusion should not be present or should have an appropriate Professional Services Carve-Back to the Exclusion. Why have a Professional Liability policy if it does not cover actual or alleged Claims resulting in this type of Economic Loss?
4. Construction Manager At Risk Exclusion - Again, similar to the above, this type of Exclusion should not be present or should have an appropriate nullification provision if you or your client self-performs or contracts with others to perform any type of construction operations, including relatively innocuous tasks such as cabling for telecommunications or other applications, etc. Supervision of contracting operations whether self-performed or sub-contracted is a Professional Services and policies excluding claims related to this exposure must be avoided.
5. Means, Methods and Techniques (MM&T) Exclusion - Unless properly crafted, an Exclusion that pushes all claims for actual or alleged Bodily Injury and Property Damage resulting from MM&T related claims to a CGL policy is dangerous as all PD claims are not covered under a CGL policy, i.e. The PD to Your Work Exclusion; and, the Exclusion for PD to Your Product Arising out of it or Any Part of it. If your or your client's policy has such an Exclusion you should contact us.