Posts Tagged ‘Professional liability insurance lawyers’

What Are They Asking?

September 12, 2012

Kelan J. Vorbach, CIC

This question came in from a firm administrator, “On the Real Estate Practice Supplement, when they ask for the average value on real estate transactions, do they mean  the value of homes bought & sold or value of fees that we charged for the closing we handled?”

The insurance company wants the value of the property. Professional claims in the Real Estate Area of Practice generally relate to the value of the property in question. Real Estate attorneys in areas with substantially higher home values (Alpine, NJ, Sagaponack, NY, Greenwich, CT and so forth) represent a higher risk to the insurance company.

For more information or to ask a question of your own, contact me at www.LawFirmInsuranceExpert.com.

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The Client Wants to be Named on Your Policy

April 12, 2012

Kelan J. Vorbach, CIC
Professional Liability
Program Manger,
John B. Wright Insurance

If a client asks to be named additional insured on your firm’s professional liability policy, don’t just say okay and have the office manager call your agent.   Making a client an additional insured allows the carrier to invoke the insured versus insured exclusion. The following policy wording is typical:

 

EXCLUSIONS

This insurance does not apply to claims:

4. Made by one insured under this policy against another insured under this policy.

 

The additional insured endorsement is normally used to make an over contractor an insured on a subcontractor’s policy, to protect the over contractor from claims made by third parties, where the over contractor may have vicarious liability for the subcontractor’s negligence. In the attorney client relationship, the client (rather than a third party) is by far the most likely claimant. Further, most clients are not attorneys so they have no professional liability exposure. The additional insured endorsement serves only to exclude coverage for the most likely claimant, the client.

 

Each situation is different. If you have specific questions contact your agent or give me a call.

Kelan J. Vorbach, CIC is the Professional Liability Program Manager with John B. Wright Insurance. You can check him out at http://www.LawFirmInsuranceExpert.com. For a consultation call 732-223-6611 ext. 108.

Now What Do We Do?

April 5, 2012

Kelan J. Vorbach, CIC
Professional Liability
Program Manger,
John B. Wright Insurance

This call came in from the office manager. The partners wanted to ignore the issue but the office manager thought I might be able to help.
The problem was a new hire. It was a key non-professional role in their busy office. The first time they thought it was a fluke. One day, the new employee didn’t show up and didn’t call in. When the employee arrived the next day, the explanation given was personal reasons. Management reviewed the policy on calling in with the new employee and assumed that was the end of it.
A few weeks later it happened again, no phone call and the employee was unreachable by phone. The firm left messages. The new employee responded by text message, again citing personal reasons but this time claiming he felt intimidated by one of the partners. The intimidation claim concerned the partners enough that they were just going to let it go and not do anything. Fortunately the firm had an Employment Practices Liability Insurance (EPLI) policy. In addition to covering employee claims of discrimination and harassment (including sexual harassment) the EPLI policy provides management tools and a toll free help line. A single call to the help line solved the problem. The firm was connected to an experienced employment law attorney who reviewed the facts of the case, including information regarding age, health, gender, orientation and ethnicity. By the time they completed that call they had the confidence to immediately fire the bad employee, knowing there was no reasonable basis for a claim.
While EPLI is an insurance product designed to pay employment practices claims and defense costs, the toll free confidential support is the most frequently used policy feature. The carrier benefits by assisting the firm in claim avoidance and risk reduction. The firm benefits from the management support they receive.
As a class, insurance carriers consider law firms a fairly high risk for EPLI claims. Therefore EPLI coverage for law firms is generally available only as a stand alone policy or as part of a management liability policy. If your firm does not carry Employment Practices Liability Insurance, I urge you to consider it. For more information contact your agent or give me a call.

Kelan J. Vorbach, CIC is the Professional Liability Program Manager with John B. Wright Insurance. You can check him out at http://www.LawFirmInsuranceExpert.com. For a consultation call 732-223-6611 ext. 108.

Choose Carefully

March 30, 2012

Kelan J. Vorbach, CIC
Professional Liability
Program Manger,
John B. Wright Insurance

In my blog I like to address real issues from real law firms. Usually it’s something positive. Today it is a cautionary tale. I got a call this week from a firm that had a problem with their agent and wanted to change agents right away. When a call starts like that, nothing that follows is good.
The firm is well managed; but, their back office routine broke down when a key individual had to care for a sick relative. The firm failed to pay their renewal premium and their professional liability policy lapsed. The consequences of a gap in coverage on a professional liability policy are severe. While replacement policies are available; as a rule, when there has been a lapse in coverage, underwriters will not offer prior acts coverage. In other words, they will not cover legal services performed prior to the effective date of the new policy.
The old policy gave them 60 days from the termination of coverage to purchase an extended reporting endorsement. For about $5,500 per attorney they could purchase the right to report new claims for all services provided from the founding of the firm (back in the 80s) through the last date of coverage when the policy failed to renew. New services would be covered by the new policy. Although the firm discovered the lapse in coverage in time to buy the extended reporting endorsement, their agent told them they didn’t need it. He said the new policy would cover prior acts.
Recently a claim came in for work the firm did years ago. The insurer denied the claim because the services were performed prior to the new coverage. The firm realized too late that they had gotten bad advice. The moral of the story is that advice you receive from the agent providing your professional liability insurance can have serious consequences. Choosing an agent based on a family relationship, connection to a particular partner or other affiliation can be a big mistake. Any agent can go to a wholesaler and get you a professional liability policy. That doesn’t mean they have the experience to give you good advice. Ask tough questions. Ask if they insure other law firms and if they will let you talk to them. Be careful who you choose to handle your professional liability insurance.
Each carrier’s policy contains different language and endorsements to change the policy language may be available. For specifics on how your policy handles prior acts coverage call your agent or contact me for a consultation.
Kelan J. Vorbach, CIC is the Professional Liability Program Manager with John B. Wright Insurance. You can check him out at http://www.LawFirmInsuranceExpert.com. For a consultation call 732-223-6611 ext. 108.

He Looked Before He Leaped

January 26, 2012

A partner with an established firm located in central New Jersey asked me smart question. Questions that come before the firm does something and include the words, “What are the ramifications of…” are always smart questions.

In this case, the attorneys that are with the firm are all admitted only in New Jersey. A prospective new hire is admitted in both New Jersey and New York. What are the ramifications of having an associate that is also licensed in New York?

Traditionally, just being licensed in another state doesn’t have any impact on professional liability insurance. While I have seen policies with specific state exclusions, these are rare in my part of the country. Some carriers ask what precautions are taken to ensure compliance with state specific issues like statutes of limitations if the firm accepts cases in states where the firm does not have offices. It is not a big deal, they just want to make sure the firm is taking prudent steps to avoid stepping into a problem.

New York State has some unusual workers compensation regulations that may come into play for out of state firms, depending on the amount of time firm personnel spend in New York. These are easily addressed, just let your agent know before you send people to New York.
Of course, each carrier’s policy contains different language and endorsements. For specifics on how your treats other states call your agent.
Kelan J. Vorbach, CIC is the Professional Liability Program Manager with John B. Wright Insurance. You can check him out at http://www.LawFirmInsuranceExpert.com. For a consultation call 732-223-6611 ext. 108.

We Plan to Hire an Independent Contractor. Does Our Policy Cover Her?

January 10, 2012

Kelan J. Vorbach, CIC

The the question that is the title of this post may not be the right question. Does the firm want to be covered for the independent contractor’s wrongful acts or does the firm want to cover the independent contractor?  

Normally, the firm is covered for professional claims regardless of who performs the services.  Current and former owners, partners, employed lawyers and of counsel attorneys are similarly covered for work done on behalf of the firm.  The carrier will defend both the firm and the individuals.

Independent contractors are generally treated less favorably. Though the carrier will respond to claims against the firm based on the services the independent contractor performed on behalf of the firm, they may not respond to claims made against the independent contractor for those same services. Further the carrier may try to shift all responsibility to the independent contractor if both the firm and the independent contractor are sued.    

Of course, each carrier’s policy contains different language and endorsements to change the policy language may be available. For specifics on how your treats independent contractors call your agent.

Kelan J. Vorbach, CIC is the Professional Liability Program Manager with John B. Wright Insurance. You can check him out at www.LawFirmInsuranceExpert.com. For a consultation call 732-223-6611 ext. 108.

How does a new practice area affect professional liability?

October 17, 2011

Kelan J. Vorbach, CIC

A client sent me a great question,

 “If I handle a divorce and family law wasn’t specified on my malpractice application, do I need to to inform my carrier?”

You don’t have to tell your carrier immediately but you should talk to a professional liability specialist before venturing into any new area.  Most policies cover without limitation to the areas indicated on the application (assuming you disclosed all areas that applied at the time of the application). New areas must be disclosed on renewal.

 However, some areas dramatically increase your price for years, even if you only perform a one time service. Since it is better to know what you are getting into you should consult with an agent versed in professional liability before you are committed. A general practice firm that dabbles in a high risk area can spend more in premiums than they made in fees. 

If you have a question write me or call 732-223-6611.

www.LawFirmInsuranceExpert.com

How do you reduce the risk of a new hire creating professional liability problems for your firm?

October 12, 2011

Kelan J. Vorbach, CIC

It is critical to vet the attorney before hiring. A great tool to do this is a New Lawyer Supplement form that you can get from your professional liability carrier. These forms ask probing questions about claims and circumstances involving the individual attorney. While the carrier may not require the form until renewal time it is better for the firm to know BEFORE hiring.

You should be careful about files the new attorney is bringing from the old firm. These can be a source of claims so ask questions and be prepared to probe deeper.

Once you’ve made the hire, train and observe to make sure the new attorney complies with your firm’s standards and procedures. Their last firm may have had different controls and their routines may not fit with your system.

To learn more about this or any other lawyers’ professional liability question, or to get a second opinion on your policy, please call me at 732-223-6611 ext. 108.