Oregon is the only state that mandates practicing attorneys to carry professional liability insurance. The approach of many jurisdictions is to require uninsured lawyers to disclose in writing to clients the lack of protection. Mandatory disclosure of policy limits below a certain threshold may also apply. Other states require neither insurance nor notification.
Attorneys who do not carry malpractice insurance unnecessarily expose assets and possibly future income. Faced with a claim and high defense costs, lawyers often represent themselves casting aside President Lincoln’s pearls of wisdom: “He who represents himself has a fool for a client.” Carrying malpractice insurance not only protects from financial hardship but also provides the lawyer with access to immediate objective advice when malpractice is alleged and protects the client’s interest in the event of a credible claim.
The following are just a few of the practicalities to consider in the malpractice insurance arena:
When completing the application, NEVER withhold specifically requested information even if it seems damaging and embarrassing. Failure to disclose all information may result in the carrier voiding the policy.
Attorneys should be familiar with their policy’s notice provisions regarding potential claims. Many require the insured to give notice of all circumstances that would reasonably be expected to give rise to a claim. Failure to comply could result in a denial of coverage.
If an assistant takes care of the renewal process, insist on proof that the policy has been renewed and that the check for the premium was cashed.
Since most lawyers have “claims made” policies, a retired attorney is not covered if a claim is reported after the expiration of the policy maintained while in practice (even if the action or non action leading to the claim occurred during the period of the policy). Attorneys contemplating retirement are wise to investigate an Extended Reporting Endorsement also referred to as a “tail policy” which extends the term of an existing policy.
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