Spring Check-Up: Assessing Your Insurance Policy This Season

Spring will be here soon and usually during spring we do what is called spring clean ups or check up.  We look at the lawn mower, the weed whacker and car wash stuff all because Spring is a new start. 

In my world, the same holds true for insurance.  I like to review my policies and make sure I have what I think I have and make any tweaks that I feel are necessary to be properly insured. 

Knowing that most people renew or purchase a policy and stuff it away somewhere for the year, the spring check up might be a good idea for you.  Things I look at during my check up and you should too are:

1. Limits: are they sufficient?  Will there be enough there to protect you in the event of a claim.  Make sure you review both the per claim limit and the aggregate limit.  Aggregate being the total amount available during the policy year.

2. Deductible:  Are you comfortable with the current amount?  Will you be able to pay it when it comes time?  On paper 5 or 10k might not seem like a lot of money but during a claim sometimes money can be a little tight.  

3.  Defense costs:  How are they handled?  Are defense costs/cost of defense  included in your limits of liability or are they in addition to your limits?  If you carry lower limits, say 100k and your defense costs are included in that limit it may not take very long to go through the limit before the case is resolved.

4. Insureds: Make sure you know who actually is insured on your policy – you, your staff, independent contractors, of counsels, former employees.  It always good to know who is covered and who is not

5. Prior acts: Check and make sure that your prior acts coverage is correct.  We all know that claims can and usually do stem from professional services we performed prior to the start of your current policy period.  Make sure your policy contains prior acts coverage.

6. Effective date. Make sure your policy is current and that you didn’t miss the renewal date.  Sounds stupid but it does happen.  People just forget to renew or just put it off until it is too late.

So before you start to cut your grass or use the weed whacker make sure you have a new spark plug in place and give your LPL policy a check up too.  

Unveiling the Risks: How the ‘Of Counsel’ Title Can Impact Your Insurance Coverage

Titles in business are considered very important: President, CEO, VP etc……law firms the same thing…Partner, senior partner, member, associates.  But did you know there is one title in a law firm that can cause confusion and sometimes affect insurance coverage?  The title OF COUNSEL. 

I’ve been told, ask 10 lawyers the definition of OF Counsel and you’ll get 10 different answers.  At some point, we can discuss and try to narrow down a more specific definition of what an OF Counsel is but today I want to point out how the term OF COUNSEL may affect your legal malpractice insurance coverage at retirement.

Most policies provide what is called a free retirement tail endorsement when an attorney from the firm retires.  Usually there are a few requirements that must be met in order to qualify for that free tail.  On some policies OF COUNSEL attorneys are not eligible for the free tail strictly because they are titled OF COUNSEL.  This usually is not an issue for a solo but for firms with 2 or more attorneys it can cause great concern.

I have seen instances where firms with 3 or 4 attorneys give the title OF COUNSEL to the founding member of the firm with no consideration of how this could affect the founding members coverage, his or her estates coverage or the retiring attorneys financial position during retirement.  Usually the change to OF COUNSEL is a result of the attorney working less hours and nothing more.  In this case it seems a shame for the attorney to lose coverage and in some cases not be able to get back because of working less time?  

So before changing anyone’s “title” to OF COUNSEL and printing new letterhead check your legal malpractice policy. Contact your broker/carrier and ask them for an interpretation of the coverage.  Make sure the change to OC won’t affect the retirement tail coverage. OR if it does you know and are ok with any change.  Who knows, maybe it won’t change but then again maybe it will.  Better safe than sorry.