Switching legal malpractice insurance carriers may seem like a routine administrative decision, but it requires proper handling to protect the law firm’s interests. Under a typical claims-made lawyers professional liability (“LPL”) policy, attorneys are required to report known claims and potential claims to their current insurer within the policy period. This obligation becomes especially critical when transitioning to a new carrier and applies whether the change in insurance carriers is initiated by the law firm or results from the insurer’s decision not to renew the policy or the insurer exiting the market.
Failing to report claims or potential claims before switching insurers can result in a complete loss of coverage—both from the outgoing and incoming carriers. In such cases, the law firm may be left to shoulder defense and indemnity costs on its own, which could amount to millions of dollars in high stakes matters. This article outlines the importance of timely reporting, explains key definitions under LPL policies, and provides scenarios to illustrate how law firms can protect themselves from costly coverage gaps.
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Old Republic Lawyers Professional insurance contracts are underwritten and issued by one or more of the following: Pennsylvania Manufacturers’ Association Insurance Company; Manufacturers Alliance Insurance Company; Pennsylvania Manufacturers Indemnity Company, rated A+ (Superior) by AM Best. For the latest Best’s Credit Ratings, access www.ambest.com. This material is provided for informational purposes to describe the coverages that Old Republic Lawyers Professional offers. Coverage is subject to underwriting and the applicable policy terms, conditions, and limits. This is not intended to and does not modify the terms and conditions of any insurance policy or imply that any particular claim is covered.