• DTPA coverage. Some policies will not cover additional damages under the DTPA. DTPA coverage is still important, despite recent changes in the law. Misrepresentation by an attorney is still actionable under the DTPA. TLIE's Regular Policy covers DTPA additional damages, provided that coverage is not otherwise excluded. For example, if a DTPA violation also constitutes a criminal act, there would be no coverage since criminal acts are excluded.
• Coverage for punitive and exemplary damages. Policies rarely cover punitive and exemplary damages. No policy covers criminal, malicious or fraudulent acts, but punitive damages can be assessed on grounds short of such allegations. TLIE's Regular Policy contains no exclusion for punitive or exemplary damages.
• Innocent partner protection. Clauses in some insurance policies waive exclusions as to partners who did not participate or acquiesce in culpable conduct. The extent of such "innocent partner" protection varies from policy to policy. The TLIE policy waives the exclusion for criminal, dishonest, fraudulent and malicious acts for any insured who did not participate or acquiesce in such acts or remain passive after having personal knowledge of such acts.
• Per claim deductibles vs. aggregate deductibles. Deductibles may be stated to be either per claim or aggregate. With a per claim deductible, if you have two claims in a policy year you could have to pay your deductible twice. TLIE's Regular and Basic Policies both have aggregate deductibles, so the maximum deductible you could pay in a policy year is fixed.

Almost all attorneys' professional liability insurance is now written on a claims made basis. "Claims made" means that, unlike your auto policy, the policy in effect when the claim is made to you and reported to your carrier is the operative policy. If the policy expires before you report the claim, you have no coverage under that policy. In addition, most policies also exclude claims of which you knew or should have known at the time you purchased insurance.

Prior acts restrictions exclude coverage for acts that occurred before a certain date or on behalf of a certain firm. Look for a "retroactive date" in proposed policy terms. A policy with a retroactive date usually does not cover acts occurring before the retroactive date.

Insurers may not cover your prior acts due to your claims history or the history of your former firm. In general, if you have left a large firm that is likely to maintain insurance, you do not need prior acts coverage. Most policies cover former members of the firm for their acts on behalf of the firm. If the prior firm has dissolved, however, you may want to try to obtain prior acts coverage. The statute of limitations for legal malpractice is, in many situations, two years from the date of discovery of the error by the client.

You want to know how your carrier will treat you when you have a claim. Some carriers may dictate choice of counsel without asking for your input in the event you are sued. Similarly, some carriers have provisions in their policy that put significant conditions on your decision on whether or not a claim should be settled. Consent to settle provisions, or "hammer clauses," provide that if the carrier wishes to settle a claim but the insured withholds consent, the insured will only receive benefits under the policy equal to the amount for which the carrier could have settled the claim. In effect, your limits of coverage for the claim will be reduced to the settlement amount offered by the insurer. If you truly believe a settlement is unjustified, you have almost no ability to determine whether to seek a just result under such clauses. Most carriers have non-attorneys supervising claims, from locations outside of Texas.

TLIE's policy specifically provides that we must consult with you about choice of counsel before hiring counsel, unless there is an emergency of some sort. TLIE's policy has no hammer clause. Instead, if the insured firm disagrees with a decision to settle and there is sufficient time before trial, a procedure allows a review of the situation by three of your fellow attorneys. All of TLIE's in-house claims counsel who supervise claims handling are experienced Texas attorneys. We know Texas law and Texas jurisdictions.

TLIE has provided insurance to Texas attorneys since 1979. Texas attorneys founded us, and our insureds elect the board of directors. In the past two years, TLIE has returned a total of $8.25 million to its members. Because we are owned by our insureds, you can expect prompt and courteous service. We offer superior loss prevention services to all members, including consultations, seminars, and self audits. For more information, either follow one of the links below or contact Jean Sholes or Sam Risinger by email, toll free at 1-800-252-9332, or by fax at 512-482-8738.

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