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What is Claims-made and Report Coverage?

“Claims-made-and-reported” coverage is the most common type of coverage provided in professional liability insurance policies. It is distinguishable from “Occurrence” coverage in that the relevant date to determine coverage is when the claim is made and reported, not when the act or omission giving rise to the claim occurred. Most people are familiar with occurrence coverage from their auto or homeowners policy. With these types of insurance, the policy that covers a claim is the policy that was in effect on the date the event giving rise to the claim occurred (e.g. the auto accident or the hail storm). However, with claims-made-and-reported coverage, the key date is the date the claim is first made against the insured or the date the insured first becomes aware of facts or circumstances that might reasonably be expected to be the basis of a claim, NOT the date of the alleged error or omission by the insured. The claim generally must be reported to the insurer during the same policy period as the insured’s first knowledge. Insureds should also be aware of the term retroactive (“retro”) date. If a retro-date exclusion applies, the policy will not cover any claim arising from an act or omission that occurred prior to the retro date, regardless of when the claim is first made or when the insured first became aware of facts or circumstances that might reasonably be expected to be the basis of the claim.

What is the difference between first dollar defense and waiving first dollar defense?

With first dollar defense, you pay your deductible ONLY if there is a payment for Damages. The company pays your defense costs not to exceed limits of liability. More than two-thirds of all Claims close without a payment for Damages, therefore NOT triggering your deductible. If your policy states the deductible applies to Damages AND Expenses, your deductible applies to the first dollar that is spent by the company for defense or settlement of the claim.

What is “career coverage”?

Career coverage provides protection for legal services for your entire past career as a practicing attorney. The Bar Plan does provide career coverage if you have had continuous coverage.*

What is the difference between prior acts coverage and career coverage?

Prior acts coverage can be limited by endorsement or by the policy language. Career coverage covers your entire past career as a practicing attorney.

What limits should I carry for my practice?

Recommended limits vary. In considering limits, ask yourself: “If I make a mistake, how much will the client be damaged?” Your premium depends on many factors, including your areas of practice and the limits of liability you choose.

Do most policies offer first dollar defense?

Yes, but in many policies you must request this coverage. It is not automatic. The coverage must be endorsed on the policy for an additional premium. The Bar Plan provides first dollar defense.

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