Claims Made vs. Occurence with Professional Liability Insurance

Gary Beck talks about the difference between claims made versus occurence triggers within insurance products, and what lawyers with legal malpractice insurance (a.k.a. professsional liability insurance) need to know about their currenge coverge and how to determine if they have the best and correct coverage for their situation. 

Transcript

Alexandra: My name is Alexandra I. Am in sales and marketing here at the Beck Company today. My guest is Gary Beck and he’s going to be discussing claims made versus occurrence with us today. So claims made versus the currents, Gary. What’s the difference?

Gary Beck: Well, insurance policies have what are called triggers 1. Trigger is based on an occurrence of when something happened. That’s what most people are familiar with. When did the car accident happen? When did the fire burn the house down? What was the date of the occurrence, however? And professional liability policies like legal malpractice, those are written on what are called a claims made basis. So it doesn’t really go to as a trigger. When the actual negligent act might have happened, the deadline was missed. The lien was missed. Some statute of limitations was allowed to run. It’s when the client actually found out about the issue and made a claim for money. Damages against the lawyer for legal malpractice, saying I was harmed because you were negligent and didn’t meet the standard of care that is a claims made policy or a claims made trip.

Alexandra: So why is this important? And when would it be applicable?

Gary Beck: Well, it’s going to be applicable based on the contract of insurance itself. It’s important because it will provide you coverage or not if you fail to adhere to it, and sometimes they are very complex issues that determine when and if a claim is covered.

Alexandra: OK, so I’m you know, I’m shopping for insurance. Choosing what I want, how do I make sure that I have the right coverage and? Speak to me. Like I don’t know it, I don’t have the verbage well.

Gary Beck: First of all. I often see situations and counsel lawyers. On what is the? Best kind of coverage to have we don’t really have a choice of claims made and occurrence in professional. Almost all of them were written claims made, but even very well educated lawyers often misunderstand the claims made nature, and what the retro date or the prior acts date on that coverage is. That’s why it’s so critically important, because if you don’t pay attention and understand. And get some policy that has the right. You will not have coverage when you. Think you do.

Alexandra: Can you share an example of it? Like a specific incident where a claim could have been avoided?

Gary Beck: Yes, I often see and especially these days lawyers will leave one firm and go to another. And the first reaction is ohh do I need tail coverage. You don’t necessarily need tail coverage if you’re just moving firms, but what you do want to know is if your new firm will pick up your prior acts date at your old. The firm, the reason that’s important is because the Old Firm can. Forget to renew their coverage. They can do any number of things and you wouldn’t be aware of it and you would lose that prior acts coverage at the Old Firm. So you want to make sure, if possible, to have yourself endorsed onto the policy at the new firm with your same prior acts date. So that you don’t lose coverage, that’s just important to consider when you’re making a move.

Alexandra: Well, I’ve been again. Thank you as always for sharing information with us. It’s always a wealth of knowledge and it’s very informative. If anybody needs to have further information or advice, you can go to specspecialrisk.com to learn more, locate contact information or to schedule a meeting with one of our team members. Gary, thank you again for being with us today.

Gary Beck: Thank you for having me.

Alexandra: That’s a wrap, everyone. Thank you for tuning in this week. Stay tuned for more podcast coming out soon. This is Alex signing off.