Do you have prior acts coverage? What exactly does that cover? If you change carriers, will you be covered for work you completed while employed by your former firm? Do you know? If not, you might want to take a closer look at your insurance policy as you might be surprised as to what could be excluded.
The average lawyer might not be aware that the vast majority of insurance companies that provide legal professional liability coverage have language limiting coverage on prior acts. The impact of not having prior acts coverage is that you possibly will not be covered for claims arising from past work at previous firms.
To ensure you have sufficient coverage, refer to your policy’s definition of “insured,” “Professional Services,” or “Legal Services,” or the “Coverage” section. Many policies state they only provide coverage “while providing professional services on behalf of the Named Insured or predecessor firm(s)” or “while acting on behalf of the Named Insured for clients of the Named Insured.” This means you only have coverage for services provided to clients of the “Named Insured,” which is the firm for whom you are currently working. This leaves your prior work, while employed at another firm, vulnerable to future liability. It may also exclude pro bono work or work for others who are not clients of your current firm. And once you lose coverage for prior acts, you may not be able to get it back.
The Bar Plan’s policy offers a broad definition of Legal Services and does not limit coverage to work done only on behalf of the policyholder firm. Insurance companies who claim they have “full prior acts coverage” are misleading insureds and potential insureds when their policies contain the “on behalf of the Named Insured/Policyholder” prior acts limitation.
Again, many companies claim that they offer prior acts coverage. Knowing your policy, and where to find this potential limitation, protects you and your law practice. If you need assistance understanding your policy, contact one of our Agents at 1-800-843-2277 or via email.