Understanding Your Policy: Claims-Made Reporting Procedures

Attorneys often ask us, “Now what?” after applying for malpractice insurance. We’re uncovering the mystery; here’s what you need to know about what happens after you apply and in the event you need to utilize your coverage.

Once you’ve completed the malpractice application process and bound coverage, you will receive a copy of your professional liability insurance policy. While it’s important to keep a copy of your policy filed away in a safe place, before you do so you should immediately begin to familiarize yourself with the claims-made reporting procedures within your policy.

Virtually every lawyers’ professional liability policy being sold today is written on a claims-made-and-reported basis. A claims-made-and-reported policy has a two-part trigger for coverage: first, that a claim is made against the insured during the policy period, and second, that the insured reports the claim to the insurer within the policy period. These policies have a set of distinct procedures the insured must follow in order to report an incident, circumstance or claim. It can be titled differently in every policy, but here are some suggestions to look out for:

  • “Notice of Claims”
  • “Notice of Claims and Potential Claims,”
  • or, “Insured’s Duties in the Event of a Claim.”

Reporting a claim or potential claim is one of the most important obligations, if not the most important obligation in a claims-made policy.   These policy reporting procedures must be strictly adhered to; otherwise, the insured risks the possibility of a denial of coverage or rescission of the policy altogether based on non-compliance. Familiarizing yourself with these procedures at the very start will give you the basic knowledge to take a proactive approach and avoid the pitfalls that can arise should you receive a potential incident or claim from a former client.

Today, most lawyers’ professional liability policies have a twenty-four-hour-a-day pre-claims assistance hotline to call if you are debating or have doubt about whether you should be reporting a set of facts or circumstances.

The best way to protect yourself is to plan ahead. By taking the time to familiarize yourself with these claims-made-and-reported provisions within your policy, many attorneys can strategically avoid the most common coverage issues that arrive with the filing of a legal malpractice action.  Report a claim to your insurer as soon as you are aware of it. Submitting notice to your insurer in writing is advisable whether or not your policy requires written notice.

We’re here to assist you with any questions you have regarding your policy. Give us a ring if you ever have a question or doubt about your coverage!