A Guide to Prior Acts Coverage for Attorneys and Law Firms
For attorneys and law firms considering malpractice insurance coverage, one question often comes up. Do I need prior acts coverage? Attorneys and law firms considering coverage may have several questions surrounding prior acts coverage.
- What is prior acts coverage?
- What is a prior acts exclusion date?
- Is prior acts coverage the same as tail coverage?
We hope this guide to prior acts coverage for attorneys and law firms allows you to better evaluate your options when looking to purchase professional liability insurance.
What Is Prior Acts Coverage?
Prior acts coverage provides a retroactive coverage date for each lawyer covered on a claims-made policy. Generally, each lawyer in a law firm is subject to a firm’s retroactive date as long as they are employed at that practice. A law firm’s retroactive date is typically the date the firm opened its practice and initiated its first professional liability policy. Prior acts coverage identifies the period of time professional services are covered, subject to policy terms and conditions. Therefore, claims that were made years ago would be afforded coverage by the policy that was in place at that time.
Generally speaking, if a law firm has gaps in their coverage, malpractice insurance providers may not be able to offer this type of coverage. Additionally, if a gap in coverage occurs, a law firm could potentially lose prior acts coverage and may be required to purchase tail coverage or extended reporting period (ERP) coverage, if available, and a retroactive date inception (RDI) policy going forward. That is why it’s important to continuously carry professional liability insurance from the moment a firm opens its doors.
On a separate note, say your law firm did not obtain professional liability when it opened either because your state didn’t mandate it, or you didn’t understand the importance of professional liability insurance. It’s good you are realizing the importance of a lawyer’s professional liability policy now, but you will only have coverage for claims made after your policy’s effective date. Moral of the story, you should look into obtaining professional liability insurance as soon as you open your practice to avoid any unnecessary gaps in coverage.
What Is a Prior Acts Exclusion Date?
Some policies may include exclusionary language. A prior acts exclusion date prevents claims that are made before the date listed from being covered. The language, may read in a manner such as: “It is agreed that this policy does not apply to any claim based upon or arising out of a wrongful act by any attorney listed below that took place prior to the date set forth opposite such attorney’s name.”
For example, say you submit an application for a quote from a new insurance provider. That insurance provider should look at your firm’s current lawyers malpractice policy. Now, let’s say that firm has a lawyers malpractice policy with prior acts coverage going back to 3/17/2005, the new quote should be rated with coverage back to 3/17/2005 and there should be a prior acts exclusion attached to the quote stating, claims that arise from legal services offered before 3/17/2005 will not be covered under the policy.
Is Prior Acts Coverage the Same as Tail Coverage?
No, prior acts coverage is not the same as tail coverage.
Tail coverage, often known as ERP coverage, is additional coverage that a lawyer or law firm may opt to add to their malpractice insurance policy. Tail coverage is an extension to report a claim on the last policy purchased and would effectively respond to claims made for services rendered up to a policy’s expiration date, subject to a policy’s terms and conditions.
Prior Acts Coverage Through Aon Attorneys Advantage
If you are starting your own law firm, moving on to a new firm, or switching insurance providers it’s important to avoid gaps in your coverage and understand the ins and outs of prior acts coverage.
At Aon Attorneys Advantage, we can help tailor coverage for your firm. Get a free quote from Aon Attorneys Advantage.
This information is provided for general informational purposes only and is not intended to provide individualized advice. All descriptions, summaries, or highlights of coverage are for general informational purposes only and do not amend, alter, or modify the actual terms or conditions of any insurance policy. Coverage is governed only by the terms and conditions of the relevant policy.