Malpractice Insurance Frequently Asked Questions

Aon plc (NYSE: AON) is a global corporation that provides insurance, reinsurance, risk management, investment banking, human resource solutions and outsourcing services. Aon has approximately 500 offices worldwide, serving 120 countries with 50,000 employees.  

With roots that go back to 1918 and a small Detroit insurance agency, the modern company was created in 1982 when the Ryan Insurance Group merged with the Combined Insurance Company of America. In 1987, the company was renamed Aon, a Gaelic word meaning “oneness.”

Aon Affinity is the division of Aon that develops, markets and administers customized insurance programs. Aon Attorneys Advantage is the business unit of Aon Affinity that specializes in providing malpractice insurance for attorneys (also called errors and omissions liability insurance).

Lawyers Professional Liability Insurance, sometimes referred to as Malpractice Insurance helps protect legal professionals against claims alleging an act, error or omission related to their professional services.

An insurance company that is ‘admitted’ is approved by the state’s insurance department to sell insurance to the general public in that state. Their rates must be filed and approved by the state’s insurance department and they must comply with the department’s regulations. An admitted insurer is often referred to as a standard market carrier.

A non-admitted insurance company has not been approved by the state’s insurance department. They do not file their rates with the state, nor do they have to comply with state regulations. This gives non-admitted insurers the flexibility to write more unique and hard-to-place risks. Non-admitted insurers are also referred to as a nonstandard market carrier or an excess and surplus lines carrier. 

For the Aon Attorneys Advantage program, we have both admitted and non-admitted carrier solutions to meet the needs of different types of law firms.

A per claim deductible is paid each and every time there is a claim. An aggregate deductible is the total deductible amount that can be paid in a policy year, regardless of how many claims are made.

A claims-made policy will respond to claims made against an insured if they occur and are reported to the insurer during the policy period.

Prior acts coverage refers to coverage for acts, errors or omissions that occurred prior to the policy's inception date.
 
The retroactive date is typically the date the client started practicing law and initiated their first professional liability policy. It is the earliest date that an act, error or omission may occur which will be covered by the policy if a claim is made.
 
Full prior acts coverage means that there is no retroactive date on the policy. The insured is covered for all acts, errors or omissions giving rise to a claim that may have arisen prior to the policy inception date. Full prior acts coverage is an important provision when changing professional liability policies as it extends coverage to claims that are reported during the new policy period but occurred during the previous policy period.

Because a claims-made policy form covers claims that occur and are reported during the policy period—an extended claim reporting period endorsement (ECRP) is recommended when a firm dissolves, an attorney retires or ceases practice. The ECRP or “Tail Coverage” extends the claim reporting time under the policy for a specified period of time, either 1, 2, 3, 5 years or Unlimited, after the firm has closed its doors or an attorney has ceased practice.

CEOL means claims expenses are paid outside the professional liability policy limits and won't erode the limits of liability. CEIL means claims expenses are included within the limits of liability. In the latter case, depending on the cost of the legal defense it can reduce the amount of coverage available for a settlement or judgment. 
 
The Aon Attorneys Advantage policy pays claim expenses on a CEOL basis.

Underwriters generally ask if you sit on the board of directors or hold any equity interest in any businesses other than the firm. They are interested in whether these entities are clients of the firm, if the entities are non-profit or for profit, the position you hold and the amount of equity interest held by you, the rest of your firm and family members. They also want to know the percentage of your firm's gross billings that is derived from these organizations.
 
It may be perceived that legal advice given to such a client may not be as objective as it should be. Claims alleging conflict of interest tend to shift the burden of proof to the defendant and often cloud other pertinent issues. The jury may automatically assume that a lawyer acted in his or her own self-interest. It can affect premium and/or result in an exclusion on the policy for that entity.

It is now common practice for underwriters to cross-reference the way your firm is presented on your website with the information contained in your application. If you indicate that you do entertainment work on the web, but do not show it on your application area of practice, they will want clarification. An application may be declined due to contradictory information.

If it is not clear that you are not associated with other lawyers with whom you share office space, it can be confusing to the clients that visit that office. If one of your office-sharing colleagues does not carry insurance, but incurs a claim, a claimant could imply that this lawyer is a part of a de facto firm and sue the other entities in that space. In other words, such a relationship can create vicarious liability for all those in the office.
 
If you do share space, you should not share letterhead, files, clients, employees, advertising or signage. The phones should be answered either in the name of the individual lawyer or as "law offices." Office-sharing lawyers that appear to be a de facto firm may be required by the underwriters to insure together on one policy to prevent uninsured vicarious liability.

• Provide a complete and legible application.
• Be sure that the way you represent yourself in the application matches what is on your letterhead and website. Explain any differences.
• If you have experienced actual or potential claims, present the details clearly, accurately and concisely. Include your side of the story. If you have implemented measures to prevent a recurrence, include those details.

• Strong, consistent internal systems and controls can help minimize the potential for claims stemming from inadequate office procedures.
  • Manage client expectations with engagement/disengagement procedures.
  • Maintain a solid client intake and billing process.
  • Establish conflict of interest detection and avoidance procedures.
  • As a minimum, employ dual docket controls that are crosschecked by another person in your office on a regular basis. This is particularly critical if your practice areas are subject to statutes of limitation.
• Reduce high-risk areas of practice or cease them altogether. These include securities, plaintiff personal injury, class action or toxic tort cases, commercial real estate, entertainment, and intellectual property areas of practice. If you practice in these areas supply additional detail on how you effectively manage the increased risk.
• Provide good customer service and communication to your clients to reduce the likelihood of complaints to the Bar.
• Do not sue your clients for fees. They may countersue for malpractice.