Not all lawyers’ professional liability policies are created equal. In Texas, there is no prescribed policy form for legal malpractice insurance. Important provisions can vary substantially from one insurance company’s policy to another. When comparing the policies offered by different companies, you should pay special attention to the following policy provisions:
Despite recent changes in the law, coverage for claims asserted under the Texas Deceptive Trade Practices Act (“DTPA”) 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., when the DTPA violation also constitutes a criminal act.
Punitive and Exemplary Damages Coverage
Most lawyers’ professional liability policies exclude coverage for 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 TLIE’s policies preserve coverage for any innocent lawyers 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” deductible, the insured is charged a new deductible for each and every claim during a policy year. Unless otherwise endorsed, TLIE’s policies have an “aggregate” deductible whereby the insured never pays more than one deductible per policy year regardless of the number of claims.
A “hammer clause” may limit the insured’s coverage if the insurance company wants to settle and the insured does not. If an insured refuses to consent to settle, a “hammer clause” allows the insurance company to limit the coverage to only the amount for which the claim could have been settled. In effect, the coverage for the claim is reduced to the settlement demand. TLIE’s policies provide for a peer review process to assess whether settlement is appropriate in the event of a disagreement between the insured and TLIE.
Defense of Claims
You want to know how your insurance company will treat you if you have a claim. Some insurance companies choose defense counsel without any input from the insured. TLIE’s policies specifically provide that TLIE will consult with the insured before hiring counsel, unless there is an emergency. Many insurance companies have non-lawyer adjusters, often based outside of Texas, supervising legal malpractice claims against Texas lawyers. TLIE’s Claims Department is staffed by licensed Texas attorneys who 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 additional coverage of up to $25,000 to defend a single grievance complaint, with a limit on annual coverage of $50,000.