When law firm Baylor & Jackson submitted six claims to its professional liability insurance carrier (Navigators Insurance Company), the insurance company had some concerns. Each of the six claims dealt with a single set of circumstances revolving around two partners having misappropriated client funds. The Navigator’s insurance policy had an exclusion for such misuse and sought a court order relieving them of any duty to defend or indemnify the claims. The court agreed with this and ruled that the law firm was without insurance for these six matters. It is important to point out that the law firm also knew of two additional potential claims that it failed to report on its application – effectively allowing the insurance company to void the policy for misrepresentation had the court ruled differently.
Calculated Risk Advisors explains that a professional liability insurance policy is non-standard, unregulated and varies company to company. The danger in not understanding your firm’s policy – or using a broker that is not familiar with such policies – is an uncovered claim. Calculated Risk Advisors also reminds clients to report all potential claims prior to the inurance renewal date.
Contact a licensed broker today for a review of your firm’s policy.