Karen Clark 0000-00-00 00:00:00
WHAT’S IN A GAP?: The death knell for legal malpractice insurance coverage. A lawyer recently approached me asking for representation in a State Bar investigation. As I do with all clients in State Bar related matters, I asked if she had professional liability insurance and she indicated that she had been insured for the past several years. I told her that her malpractice insurance policy likely had a provision allowing for coverage of the cost to defend State Bar investigations and prosecutions. There are various types of policies, but, most provide some level of coverage. The lawyer then contacted her carrier which promptly denied coverage. Why? Because of a very short gap in her coverage. While she believed she’d had continuous coverage, there was a month-long gap at the end of her last renewal so that the policy lapsed and had to be reinstated. So, even though this lawyer had coverage at the time of the alleged misconduct, and, despite the fact that the claim was made during a period of coverage, there was no available coverage. That is because the policy was a “claims made” policy. Most, if not all, professional liability policies for lawyers are written on a claims made basis. These policies differ from “occurrence” policies in that there will be no coverage unless: (1) the claim is made while a policy is in place; (2) the conduct occurred while the policy was in place; and, (3) the coverage was continuous. Typically the “retroactive date” is the first date of continuous coverage. Once a claims made policy ends, for whatever reason, that event results in a new retroactive date. The new retroactive date effectively negates the carrier’s coverage responsibility for acts occurring prior to the new retroactive date. That means that each policy renewal must occur without interruption. The lesson here is that you should know your policy renewal date and keep in touch with your carrier to ensure that your policy is renewed without interruption. Avoid any gap in coverage, because, any gap can end coverage for conduct occurring prior to the retroactive date.
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