Important Considerations Before Buying Lawyers' Malpractice Insurance
Lawyers' professional liability policies are not all created equal. In Texas, there is no prescribed policy form for legal malpractice insurance. Therefore, important policy provisions can vary substantially from one insurance company to another. When comparing the policies offered by different companies, you should pay special attention to the following policy provisions:
- DTPA Coverage.
Despite recent changes in the law, DTPA coverage is still important. Lawyers can still be liable for certain actions under the DTPA. Misrepresentations by an attorney are still actionable under the DTPA. But some policies do not cover DTPA damages. TLIE's Regular Policy specifically provides coverage for DTPA additional damages, provided coverage is not otherwise excluded (e.g., if the DTPA violation also constitutes a criminal act).
- Punitive and Exemplary Damages Coverage.
Most policies specifically exclude punitive and exemplary damages, but TLIE's Regular Policy contains no exclusion for punitive or exemplary damages.
- Innocent Partner Protection. Criminal, dishonest, fraudulent and malicious acts by a lawyer are excluded from coverage by all policies. But the TLIE policy waives that exclusion for any other lawyer insured under the policy who neither participated or acquiesced in such acts, nor remained passive after having learned of such acts.
- Deductibles – Per Claim v. Aggregate.
With a "per claim" or "each claim" deductible, each and every claim against you during a policy year subjects you to a new deductible. All of TLIE's policies have "aggregate" deductibles so that you will never be charged more than one deductible per policy year, no matter how many claims are made against you in that year.
- Hammer Clause.
A "hammer clause" provides that if the insurance company wants to settle a claim but the insured does not consent to the settlement, then the policy will only pay the amount for which the insurance company could have settled the claim. In effect, your coverage for the claim is reduced to the settlement demand. None of TLIE's policies have a "hammer clause."
Defense of Claims.
You want to know how your carrier will treat you when you have a claim. Some insurance companies choose defense counsel without any input from the insured. 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.
Others put significant conditions on settlement decisions. Again, the TLIE policy has no hammer clause. And if our insured disagrees with our settlement recommendation, the policy gives you the right to a review by three of your fellow attorneys.
Most carriers have non-attorneys supervising claims, often outside Texas. TLIE's Claims Department is staffed by licensed Texas attorneys. We know Texas law and understand Texas jurisdictions.
Loss of Earnings.
TLIE understands that time away from your office defending a malpractice claim means a loss of revenue to you. TLIE's Regular Policy provides you with $500 for each day you are out of the office for trial, mediation, arbitration or your own deposition in defending a claim under the policy.
TLIE's Regular Policy includes an additional allowance of up to $25,000 to defend a grievance complaint.
For more information about buying a TLIE policy, contact Jason Syesta at 1-800-252-9332 or email@example.com.
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