Professional Liability Insurance Policies & Notice
It’s true that attorneys are all about representing and helping their clients as best as possible, but the truth is that they don’t really read their insurance policies and eventually hurt them. To prevent that, attorneys need to carefully read these policies in order to learn more about the coverage they offer and with this new information rethink their strategy to protect their clients.
The majority of attorneys have claims-made policies. These are practically claims made against them which are eventually reported to the insurer during the typical 1 year policy period. So if an attorney is hit with a claim in any calendar year, to be eligible for coverage, the practitioner has to ensure that he reports it in the same calendar year.
When it comes to claims made policies, attorneys need to learn more about what a claim actually is, since they can vary quite a bit. In general, claims represent a demand by a client for either services or money.
So if a client claims that the attorney has done him wrong and this wrong or mistake has eventually caused financial harm to the client or the attorney owes the client a service he failed to provide, then these allegations force the attorney to inform his insurance company about it. The insurer also needs to be informed if someone files a lawsuit against you, regardless if we’re talking about a filed lawsuit or the draft of one. Depending on where you live, failing to inform the insurance company about it may leave you unable to make any future claims.
If you fail to provide your insurer the chance to learn more about your claim, then this puts you at a very high risk of not being eligible for receiving coverage for indemnity or defense costs. This is something that generally happens a lot in New York, but the rules vary from state to state.
As a practicing attorney, you need to be fully aware of the law in your state if you don’t inform your insurer of a potential claim or a claim that has already been filed against you. You also need to know what a claim is.
For instance if a client demands information, without demanding services or money, then this cannot be considered a valid claim.
Even more, if someone demands that you’re in regulatory compliance cannot be considered a claim, unless the client demands that you perform work on his behalf.
If a client complains or expresses disappointment or dissatisfaction about your services, then this doesn’t actually qualify as a claim.
In the event a client demands an explanation from you, this is yet again not a claim.
Without more, a fee dispute is also not a claim, regardless if the client demands his fees be returned.
Within the meaning of the policy, the filing of a grievance against you cannot be considered a claim, unless the grievance’s terms represent a demand for services or money within its context.