Too often the enemy of being great is simply being good versus being awful. In fact, if something is perceived to be good or good enough then it is often deemed acceptable. Yet by reading my book, my feeling is that you are a person that does not settle for the status quo.
See in our litigious society, too many excellent law firms have had allegations of malpractice made against them. Professional liability insurance policy form language is critically important. It can mean the difference between whether your insurance company will pay claims that may result.
You need to know that not all Lawyers Professional Liability (LPL) insurance policies are created equally, and even if the policy under consideration does not contain the policy language and coverage that you desire, you can negotiate the coverage that you need, sometimes at little to even no additional cost.
Optional Endorsements— Your Key to Great Coverage
Let’s begin with the understanding that the main body of a policy form is what is called a “filed form,” meaning that it has been approved by your home states Department of Insurance, therefore it cannot be changed in the same manner as say a contract between two private parties. Yet it still can be amended through endorsements.
These endorsements are also known as “filed forms”. Your home states Department of Insurance will recognize that one policy form does not fit every situation, so they allow insurers to use these endorsements to tailor specific coverage that meets the needs of your individual law firm.
These endorsements are called “optional endorsements,” meaning that they are attached to the main policy form, and they change the coverage offered under the main policy form by your insurer. Some optional endorsements expand coverage while others take coverage away.
By now am sure you are saying to yourself, “Why would my states Department of Insurance allow an insurer to take away coverage through an optional endorsement?” Because in some cases, an insurer will only offer terms to a law firm if it carves out exceptions to coverage in a particular area of concern. Otherwise, the insurance company’s only other option would be to decline to offer coverage to your firm at all.
Optional endorsements are structured much as would be amendments to a contract between two private parties. For example, language such as, “Section I. INSURING AGREEMENT, paragraph A. is hereby amended with the following….”
If for example your law firm read paragraph A of the “Insuring Agreement” of the main policy form of your LPL insurance and understood it that you’re covered, but did not read the optional endorsement that took away coverage, then your firm could be without some if not all coverage you initially understood to have when a claim arises.
Therefore it is absolutely a must regarding optional endorsements for you to review the language contained not only in the main policy form of your LPL policy, but also in each optional endorsement offered. And here is where it gets very tricky and having a specialist with LPL will make all of the difference in the world. See these endorsements can be identified by the title and form number of each optional endorsement to include as part of a policy in your quotes to the insurance broker, but they usually do not include the actual endorsements themselves.
The titles of the optional endorsements can give you clues about their content, but these titles are usually not very descriptive. The better, more sophisticated insurance brokers will ask to review the language in these optional endorsements before presenting quotes to you. However, the ultimate responsibility for reviewing policy form language, including all optional endorsements, belongs to you. Yet wouldn’t it only make sense that an expert in LPL would be best suited to identify any fatal gaps in your protection up front?
You Must Know What to Ask For
As would be the case in any negotiation, you need to define up front what is important for your Law Firm. While lawyers are trained to review their client’s contracts in everyday practice, it never ceases to amaze me how often law firms don’t read their very own LPL policies.
Why is that? It would be my opinion over the years to surmise that lawyers just do not know that their policy form is indeed negotiable, so they pretty much review the “policy highlights” quote or analysis sheet comparing coverage between what they have and what is being offered.
This is serious business here folks as what is accepted by you is extremely meaningful in claims scenarios, and it frankly does not take long to determine whether your policy provides what coverage you have, need, and don’t have. In fact, a true LPL expert will identify by your practice what are your exposures and provide you with this information. If not, you should fir that insurance broker immediately.
In fact, in the next section I’ll describe examples of important coverage options that you should try to negotiate on behalf of your firm, and whether these coverage enhancements are typically available for free or with an approximate additional premium charge.
In next month’s issue will continue sharing more secrets on how you can easily plug all fatal gaps in your Lawyers Professional Liability insurance and leverage the multi-billion dollar insurance industry to your advantage.