Employed Lawyers - Questions Answered

Mecklenburg County Courthouse, Charlotte NC

Several questions have been asked as a result of the recent post regarding Employed Lawyers. Please note the following...

1. Q: If my attorney prospect has their own practice and works part time as an employed attorney for a corporation (or non-profit), won't the malpractice coverage for the attorney's firm include coverage for work they do for others?

A: No. "Work for others" could loosely be what we call their work for their own clients, or possibly as an "of counsel" for another firm. But while "work for others" is a concept, it's not common language in a lawyer's malpractice policy. In a situation like this start by looking at the definitions of Named Insured and Insured, and check the lawyer's policy for any endorsements that might name a third party. It's unlikely the wording will include a third party, like the attorney's part time employer in this case, as an insured or named insured.

And for those of you thinking what if the situation is reversed, i.e. the attorney is full time in practice and part time working for another entity. The response is the same - the intent of the attorney's private practice policy is not to pick up work they do as an employee for a separate and independent third party employer.

2. Q: What if the attorney is working for a company that has their own professional liability coverage - wouldn't that E&O policy cover the attorney? E&O is E&O, isn't it?

A: No again. If as an example an Engineering firm hires an attorney full time, the E&O policy for the engineering firm will be specifically worded to cover the engineering exposures. There may also be wording on some E&O policies that not only provide a definition of professional services, but they may also have an exclusion for other professional services. The other practical consideration is that many of the companies that write various E&O classes do not write lawyers malpractice, so they wouldn't want to add the attorney's exposure.

Also, even if a carrier writes both attorneys and other E&O, the policy wordings for both are very different, so adding wording for one type of operation to wording for another is never the preferred way to write a policy.

The only proper way to do this to get correct coverage for your client(s) and avoid an E&O exposure for you is to provide the appropriate policy(ies). If you have a risk with an employed lawyer, find an employed lawyer policy for them.

Other questions? Call or email and I'll be happy to answer.

New Lawyer's Professional Product

Courthouse, Clearwater Florida

We're pleased to share the news that we've added another product to assist our customers in serving their customers.

One of our A.M. Best rated A+ carrier has added coverage for Employed Lawyers. Qualified attorneys can work for entities small or large, public or private, for-profit companies or non profit organizations.

This policy is designed to provide malpractice coverage for corporate counsel (in-house attorneys). Typically these attorneys rely on their employer for coverage, and unfortunately the employer doesn't always consider the exposure until they've been hit with suit papers.

In addition to the protection provided by putting coverage in place, employers with such coverage will likely have an advantage in recruiting corporate counsel over other employers without this important coverage.

Key Coverage Features:

› Broad definition of wrongful act including actual or alleged negligence in rendering or failure to render legal services or personal injury committed by an insured
› Pro bono and moonlighting services covered with no prior approval required

› Insured includes attorneys and staff, spouse or domestic partner
› Attorneys added during the policy period are covered with no prior approval required

Limits to $5 Million

Premiums as low as $1000

Contact us for more information or an application.

Remember, we have great markets for hard to place firms as well.

Tuscano Offering Free E&O CE Classes in PA

I've developed a CE class on various Errors and Omissions topics that's approved for two hours of CE in PA. The course is designed to help active licensed agency staff, especially those working on sales, service or marketing of accounts, to navigate through the nuances of E&O risks. There's enough info to help someone who's not usually working on these classes to understand the basics, and there's also plenty of information to help those working on E&O exposures on a regular basis.

This might be of interest to you if:

1. your local association is looking for a new CE class to offer, either for a monthly meeting or for your annual Insurance Day

2. you and a few local agencies/friendly competitors want to join forces and have the CE class offered at one of your office locations

3. you have another idea and want to run it past us!

Topics include:

• Basic concepts (definitions and examples of "claims made", "prior acts" and "retroactive date", "ERP", etc)
• Pros and cons including comparison of key differences between occurrence and claims made and how to handle risks moving from one form to the other
• Additional concepts (including claims expense outside the limit, first dollar defense, "Hammer Clause", slit retro or split limit endorsements, "career coverage")
• Additional insured, waiver of subrogation, hold harmless and certificates of insurance - what you can expect from a carrier providing professional liability
• Key elements to help increase your chances of writing business

Tuscano will foot the bill, so all you or your staff have to do is attend. It's been presented a few times in Greensburg and now we're ready to take it on the road. For additional information or to talk about booking this course, contact Tim Hoelle or Emily Casino at Tuscano. 800-442-8063

Changes

Being around our first grandchild has made me once again realize how much things can and do change. He's growing fast physically and so are his motor skills. It's awesome to watch. And he's really cute too...

The market is ever changing, and recently we've seen a few of those changes in the area of architects and engineers.

Over time one admitted market has slowly but surely taken themselves out of the mix on most risks in Florida, especially since so much work in Florida involves condos. Another admitted carrier is getting less and less interested in this class and it's being reflected in their rates - upward of course. A third is non-renewing their book on risks with less than $5 MILL in revenue.

In a stroke of great timing or good fortune, or both, our options just got a little broader. In a number of states (unfortunately not in Florida) we've added another new admitted market for Architects and Engineers accounts. That gives us five options now that are admitted (four in Florida), and an even greater number of excellent non-admitted carriers complement that list for risks that don't fit on the admitted side.

Keep in mind that there are a number of ways to write these accounts, especially if your client is being pressed to carry higher limits for a specific project or client, or if they are looking at a short term project involving new exposures. We also have markets for those closely related to this class, including draftsman, engineers and consultants. Minimum premiums on smaller A&E accounts at lower limits can be as low as $1500, though most come in higher than that.

Architects and Engineers: Unique Coverage

The photo at the right is of Independent Presbyterian Church in Savannah, Georgia. An example of a type of neo classical structure, it was re-built after the previous structure burned in 1889.

In an architects and engineers policy wording, there are a number of coverage sections and elements that are a little different than other professions. If you're aware of the coverages provided and additional options available you may be able to land an account because your competition isn't familiar with coverage, or perhaps isn't able to offer these extensions. It's certainly worth a look.

Not every policy will include all of the following, and some policies may be able to be endorsed to include one or more of these coverages. In no particular order of importance:

1. ADA, FFA and OSHA supplementary payments. These coverages reference the Americans with Disabilities Act, the Federal Fair Housing Act and the Occupational Safety and Health Act. If an architect or engineer renders services and the result of their design or engineering work violates one or more provisions of the act(s), the insurance company will reimburse the insured's legal fees. This is only for legal fees, not fines or penalties, and it applies when an administrative or regulatory action is brought against the insured. Limits are usually in the $25,000 to $50,000 range, and typically these limits are in addition to the policy limits and the deductible doesn't apply.
2. Pollution coverage. It may be included, but check the wording as there's no true standard for this. Some policies are "silent" so there's no specific exclusion and no specific coverage wording either. Some will define the coverage they will provide and it will be very specific, and still others will include the coverage but at a lower sub-limit, possibly $250,000.
3. Innocent Insured coverage. Instead of having the coverage "added" this is a situation where one of the usual policy exclusions does not apply. That exclusion is for dishonest, fraudulent and criminal acts, and will not apply to Insureds who are not involved in the excluded activity, provided they report such acts to the carrier as soon as they are aware of such activity.
4. Optional Extended Reporting Period (ERP). Every policy should have such a provision to allow the insured to add time to report claims should they decide not to buy coverage going forward. The length of time varies from one to five years, and a few carriers offer unlimited ERP. The longer the term of ERP the more premium your client will pay. This coverage extension is frequently not considered when purchasing a policy, but perhaps should be in the event the principal(s) are considering retirement at some point in the near future. Some policies will include a free ERP option if the insured retires provided they have been insured by the same carrier for a specified period of time, usually not less than three years. Others may also include a limited time of free ERP if the insured is disabled or dies during the policy period. If you're inclined to talk with other clients about life or disability insurance you should be talking with an A&E firm about the same issues.
5. "Attendance at Proceedings" supplementary payments - this isn't solely found in A&E policies but its worth noting. This coverage will provide additional limits for costs the insured may have to incur as a result of appearing at a hearing or trial or similar event at the request of the insurance company. Amounts per day are $250 and up, and the aggregate during the policy is usually $5,000 to $10,000 but can be higher. Check the policy, but usually these limits are in addition to the policy limits and no deductible applies.
6. Mediation credit. If a claim is resolved by mediation the policy deductible is reduced by a set percentage, usually 50%, and is usually subject to a maximum reduction, most commonly $25,000.

If you're not sure which additional coverage might be available, check the policy or make sure you ask your broker or underwriter.

Architects & Engineers Insurance: Submissions

When I was eight years old I thought I wanted to be an architect. I had a set of plastic girders and panels made by Kenner Toy Co, ingeniously called the "Girder and Panel Building Set". I made Cape Canaveral, or what I thought was the Cape. I tore that down and made a store, and then an office building, and who knows what else. As I got older I realized that I probably couldn't keep up with the math; Trig was about as much as I wanted to deal with. And by then I had discovered girls, sports and all manner of other distractions. While I didn't become an architect, I've never lost my fascination with buildings and their design, and I'm happy I can still be involved with this class of business as a broker.

Now that you know what I was thinking when I was 8, here are a few things you may want to think about when you are presented with an opportunity to write a business providing architectural or engineering services:

• Revenue is certainly an underwriting consideration, but you will also need to obtain construction values. Annual revenue numbers are pretty obvious, but for construction values occasionally I'll see a submission that either shows "average" values or a "max" value. Unless stated otherwise, what the underwriters are looking for is the annual total value of all of your prospect's construction projects for at least three years, i.e. the "next" 12 months, the recently ended 12 mos and the 12 mos prior to that.


• "Design-Build" firms. If your client is also involved in the building process, the carriers will need a breakdown of revenue between "design only" and "design-build" operations. Even if there's a very small percentage of "build", get the info anyway.

• New in Business. Just like with any other class, if they're just starting an A&E operation, in addition to the app you'll need resumes for the principals. If they want to include names and descriptions of projects they worked on at a previous firm, that's fine, but don't have them send an electronic portfolio of everything they've done since college. If an underwriter really needs more info to qualify the risk they'll ask for it.

• Change in ownership and/or operations. If a new owner takes over you may have a chance to get your foot in the door, especially if something about risk characteristics change. If they're now doing structural engineering and they've never done that before, the current carrier may be forced to non-renew or drastically alter pricing and terms. If they've just been given a contract for a job out of the country, the current carrier may not be willing or able to extend coverage. Find out if anything has changed or is about to change.

• Specific Projects. Sometimes an architect or engineer will not have any professional liability (PL) insurance coverage and will be asked to bid on one project that requires evidence of PL coverage. As you would expect you'll need a full app and full details of the work they are going to do regarding this project to be able to arrange coverage.

• Specific Client Excess. Similar to "specific project" coverage, but in this case one client of the A&E firm is requiring higher liability limits than the firm currently carries. Details of the project will be needed to underwrite this exposure, including name of client, services being rendered, the primary limit of liability and what carrier is writing that layer. A premium indication will be provided subject to review of the primary policy wording.

• Competition/Other Carriers. Find out what carrier is writing the coverage currently. If it's an exclusive program for an association it will be tough to beat their pricing and it may save you some time and energy. If it's a surplus lines carrier you'll obviously want to figure out why (claims, areas of practice, location, etc) and make every effort to obtain terms from an admitted company. I've recently seen a couple of situations where the client of the A&E firm is requiring a minimum AM Best rating, and that may require the client to change carriers.

There are quite a few other considerations, but these are some of the more common ones. Let us know if you need more information or need to discuss a specific situation.

One Risk Not Fitting In?

At some point everyone finds themselves with a submission that seemingly doesn't fit. You're trying to finalize your clients overall insurance portfolio and you have this one puzzle piece that you just can't easily plug into place. It could be that your best customer gave you a referral with no idea how "non-standard" it is, or an existing client has pending or paid claims in the past year. Or maybe your bosses son-in-law is just now launching a new business venture.

Whatever the scenario, there are a few steps you can take that will speed up the process of getting the risk quoted, and quite possibly increase your chances of getting it quoted competitively. Here are a few issues you may have to contend with:

Losses: Don't wait to be asked for loss runs, provide them. That alone will move the process ahead faster. Most of the time either the agent or the client feel it's going to be worse if the loss runs are presented, especially if they show a loss or two. It's possible providing a loss run will be a problem, but it may also help. How? If the loss is open and "older" (more than 12 months) and the loss reserve remains the same or is reduced that's better than seeing a larger or increasing reserve amount. Also if the loss run from a year ago showed the claim as open and a current loss run has it closed, that's a better position from which to negotiate with a carrier. A closed claim, even if it seems like a high amount, is at least a "known" factor. The concern with a claim with an open reserve is the reserve can always go higher.

If losses have been the problem for your client, another way to potentially help is to get a narrative from the client as to any changes in procedures, staffing or other parts of their operation that have been implemented to prevent similar future losses. In this regard, if there's a story to tell - tell it. If the insurance carrier has free risk management service available, take advantage of it, especially if it can help your client reduce premiums and/or get out of the surplus lines market and back to the admitted market.

New In Business: Standard companies can have a difficult time writing new business operations, but there usually are very good alternative market options available. You can increase your chances of getting the account written with good terms if can provide information regarding qualifications. That would include resume's, special training, prior experience and education.

Operations/Services: You may have a tough time placing an account because the operations are considered high risk. If your client is designing and installing a "system" to prevent bridge piling erosion, it's going to be a tough placement. To optimize your chances of getting the best terms from what will be a limited number of markets, make sure the underwriter has a clear explanation of the services your client is performing. It might be necessary to be sure to list the services they do NOT offer that other similar businesses will offer to make that distinction.

The perception might be that your client is in a high risk occupation, but with proper info it may not be as much of an issue. For example I just worked on a consultant that trained others how to work through the processes to ship hazardous materials. Many carriers can't touch a risk associated with hazardous materials in any way. Other carriers were able to quote the account but only after they understood what the insured did NOT do, i.e. they did not instruct on how to ship or pack the materials, they did classroom instruction for those individuals who checked the shipments and made sure the paperwork was accurate and complete.

Bottom line; when you are thinking about details of an account, when in doubt, include the info. As you know, if you leave most company underwriters with the need to interpret a risk and rate it more conservatively vs more aggressively, most of the time you're going to get a conservative outcome. That means the carrier will rate it higher, restrict limits and/or just flat out decline it.

Take some time to get the pieces in place and you will go a long way to resolving this puzzle.

Title Agents Business, and How To Keep Your Clothes On?

Really, really good agents can sometimes get in trouble through simple misunderstandings and missed communications. Sometimes that can happen with customers, and sometimes with brokers or carriers. I'm aware of a couple of situations recently that have popped up and need to make you aware so you don't find yourself with your pants (skirt, shorts, etc) around your ankles.

Most title agencies have some escrow exposure, it's just a part of what they do. While I understand that some professionals involved with title work do not have any involvement with escrow, they're in the minority.

At least one carrier has developed an endorsement to be included on the E&O policy issued to title agency businesses. That endorsement includes wording that basically says there's no coverage for ANY escrow transaction. According to a friend of mine on their book, at least two different agencies are about to find out how good their own E&O policy and carrier are, as two different claim scenarios have developed that the insurance carrier is denying on the basis of the endorsement wording.

Fortunately we didn't handle these accounts so I'm not sure which part of the "chain" failed, but I'm well acquainted with the carrier and I'm pretty sure it wasn't them. They provide all wording and endorsements with their quote, so likely either the agent or the broker failed to clearly communicate this limiting wording to their customer. And even if they did, it makes no sense to sell a title agency a policy that doesn't offer coverage for escrow transactions. That's almost like selling a restaurant a policy that excludes cooking.

(Yes, I know some "restaurants" don't cook anything. Don't be distracted by my analogy - since this is a claims made policy, even for those rare cases where the exposure doesn't exist now, if they ever did any escrow work in the past there's no coverage for that either). Now apply that to a title agency that doesn't currently do escrow work but did so in the past and their E&O policy has a 1996 retro date. That's a major problem if there's no escrow coverage now.

If you're not sure about the options available or would simply like to discuss the account(s) you have now, let us know. We're interested in staying fully dressed, just like you.

Have We Got A Great "Combo" For You

(The combo pictured isn't what we're offering, but if you write enough of this business with us you never know!)

We have a new product that could be very helpful to you, especially if you have a client that needs E&O and GL and your standard market can't provide that option. And even if they can provide the option, you may want to make sure your client knows if the limits are shared or not, and if the E&O coverage is a broad or restricted form.

One of our non-admitted markets has given us the go ahead to offer a combination policy that provides claims made E&O plus occurrence form GL.

The highlights are as follows:

• Minimum premiums start at $750
• Limits to $5 MILL are available (for qualifying risks)
• Carrier is AM Best rated A++ XV
• GL per ISO 12-07 edition
• Quotes provided from any carriers E&O app

Additional coverage options are being discussed, like Hired and Non-Owned Auto and Employee Benefits Liability. Both would be offered at a sub-limit. We're not there yet but as soon as we get the OK to add those coverages we'll notify you.

Contact us for more information.