Legal Malpractice Insurance: Are You Really Covered?-part I
| Publication year | 1986 |
| Pages | 39 |
| Citation | Vol. 15 No. 1 Pg. 39 |
1986, January, Pg. 39. Legal Malpractice Insurance: Are You Really Covered?-Part I
Attorneys are no longer a protected class when it comes to malpractice suits. As a result, attorneys, like doctors, have to place more reliance upon malpractice insurance to protect themselves in the event of a malpractice claim. Unfortunately, most attorneys have not devoted the time or attention required to determine what types of claims are covered by their insurance, whether additional coverage is needed, or generally whether their malpractice insurance affords them the type of protection they desire. In evaluating malpractice insurance in terms of potential claims which may be asserted, the attorney should not wait until the potential claim arises to ask---"Am I covered?"
To assist in this evaluation, several areas of policy exclusions and limitations are discussed in this two-part article. While this discussion is not intended to be exhaustive of all of the policy limitations and exclusions contained in the normal malpractice insurance policy, it is intended to highlight several of the more frequent problem areas for attorneys under current malpractice policies.
Part I of this article gives a general overview of the nature of the contractual insurance policy, policy limitations and exclusions and the policy coverage of a breach of a fiduciary duty. The second part of this article will be published in the February column and will discuss policy coverage of bar complaints; punitive damages; malicious, fraudulent or willful conduct; and civil penalties and sanctions.
The attorney's professional liability insurance policy, like any insurance policy, is a contract between the insured and the insurer. As a result, the relationship between the insurer and the insured is contractual. The courts will look first to the language of the insurance policy at issue to determine an insurer's obligations.(fn1) Therefore, as a practical matter, an attorney seeking to determine the extent of coverage available should first refer to the terms of the insurance policy which has been issued.
It cannot be over-emphasized that the single most determinative factor in evaluating the scope of a professional liability insurance policy is the language of the policy.(fn2) Absent a policy provision creating a contractual obligation subject to the policy terms, an insured is not entitled to a defense or coverage.(fn3) Even if a provision creating an obligation exists, it may be subject to limitations or exclusions which affect the extent of coverage available.
Generally, professional liability insurance policies restrict coverage through (1) limitations and (2) exclusions. Limitations usually involve questions of who is insured, how long is the term of insurance, and what types of activities are covered. Often, some of the limitations are set out in a separate section labelled "Limitations." The limitations found in such a section generally relate to the monetary amount of coverage available and the duration of coverage.
Although some policies do contain sections labelled "Limitations," these are not the only limitations contained in the typical professional liability insurance policy. Other limitations exist throughout the various policy sections, specifically including the coverage and definition sections.
The most important limitations are found in the "coverage clause" (often referred to as the enacting clause). The...
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