I’ve had numerous clients over the years email me and ask me for advice about a situation, incident or potential claim that has arisen with a lawyer in the firm and whether they should report that as a claim. Here’s my advice to the firm.
First, I’m always going to make sure you refer to your actual policy about what triggers your policy’s claims made coverage. It’s important that you have read the definitions and familiarized yourself with what’s in your policy. You can usually find the Pre-Claims Assistance under the insuring agreement, coverage or supplemental coverage portion of the policy.
The second bit of advice, and something that’s often over looked in professional liability policies, is that almost every reputable carrier selling LPL insurance now offers free risk management hotlines, where the insured law firm can call a 1-800 number and speak with an insurance defense lawyer about your firm’s situation or incident before the actual claims reporting process.
Generally, the insurance carrier hires an outside law firm or will have in-house staff counsel available. These on-call attorneys will consult with you about your matter and advise you whether you should report the potential incident, circumstance or claim. These defense lawyers are experienced in lawyer’s professional liability claims, and more importantly, are familiar with your firm’s LPL policy. Some of these risk management hotlines offer continuing legal education hours for your firm’s lawyers, as well.
There’s a huge incentive for an insurance carrier to provide this type of pre-claims assistance. The sooner the insurer learns of the client’s problem, the more likely the chance of a better resolution. Even where circumstances later become a claim, early involvement can help mitigate and prevent mistakes that might increase the cost of settling a claim and can create a chain of documentation that assists in the ultimate resolution.
To encourage the use of pre-claims assistance, most insurers do not include expenses related to pre-claims assistance within an insured’s loss history. This eliminates the risk of a premium surcharge for using the service.
Often the expenses the insurer incurs in providing legal or other assistance to resolve a problem get paid out of the policy limits and not subject to a deductible. Please make sure you refer to your policies risk management hotline features to get a full understanding of the features available to your firm.