Attorney-client relationships come with a multitude of professional responsibilities.
A law office's Commercial General Liability Insurance policies carried for ownership, maintenance or use of their premises specifically excludes coverage for claims arising from professional errors and omissions. That "coverage gap" is addressed through a Lawyers' Professional Liability Insurance policy.
Lawyers' Professional Liability Insurance came on the scene the latter half of the 20th Century. The market is still small for this type of coverage and in California particularly, the costs are rising. The carriers that do participate have specialized forms, custom-tailored to the unique exposures encountered by practicing law. Although these policies offer many common features, many are modified to meet the needs of an individual firm.
Fundamentally, these policies protect lawyers and their firms against claims and lawsuits asserting damages brought about by an individual lawyer's (or firm's) professional actions. The coverage is also commonly known as legal malpractice coverage, because it provides protection for disputes regarding harm resulting in mistakes made by an attorney. Examples include, but are not limited to, erroneously constructing contracts, missing filing guidelines and other actions that financially damage clients.
Coverage is written on a claims-made basis, meaning that the policy that is in force when a claim is brought forth, is the policy that provides coverage (rather than when the alleged mistake occurred). Claims are subject to a deductible/retention, the specified limits per claim, and an annual aggregate limit. Expenses related to handling a claim are included within the policy's limits of liability. However, many policies can be endorsed to move the cost of defense against the claim outside of the provided limits.
The policy provides coverage to the firm, a specified predecessor firm, and each past or current partner, principal, shareholder, salaried employee, and "of counsel" attorney. The coverage territory is worldwide; however, some policies will require that the claim be made, and suit brought forth in the United States, its territories or possessions, or Canada.
Lawyers' Professional Liability policies generally exclude certain coverage for various reasons. Some examples include: allegations of fraud, criminal acts, dishonesty, or actions made for personal profit. Policies will also exclude coverage from one insured making claim against another named insured on the policy. Depending on the type of law practiced and size of the firm, the cost and complexity of the policy will vary widely. An agent with knowledge and access to the specified market is a valuable resource in protecting the reputation of one's practice.
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