Closing the Coverage Gaps in Your Lawyer’s Professional Liability Insurance Policy

Having gaps in your liability coverage is like venturing out into a snowstorm without an overcoat. In either case, it’s tough to succeed without protection. Before purchasing any insurance policy, you need to fully understand the basic structure of the contract in terms of what’s covered and not covered.

In general, liability policies are written as “claims-made” policies; that is, the claim for a wrongful act, error or omission must be made and reported to the carrier while the policy is in effect. This means that should your current insurance policy terminate for any reason, such as the insurer refusing to renew or your firm allowing the policy to lapse while shopping for new coverage, any wrongful acts occurring during this gap between the expiration of the old policy and the start date of the new one will not be covered unless you have either “prior acts coverage” or “extended reporting endorsements.”

The first of these, “prior acts coverage” is written into your new policy.  This allows for all incidents leading to claims after your former policy expired to be covered regardless of when they happened provided the coverage is written without a time limitation. There is generally a surcharge for this unlimited coverage based upon how many previous years you want covered. A carrier will not always write this type of “full prior acts” coverage even if you agree to the surcharge. For example, a carrier may refuse because information on your application indicates a high level of risk. Another alternative may be that the carrier provides full coverage, but only within a more restrictive policy. The carrier may also elect to provide prior acts coverage but with the stipulation that coverage would not be in effect under certain circumstances, such as a claim in which the firm knew of the wrongful act, error or omission or should reasonably have know about it prior to the start date of the policy.

Adding “extended reporting endorsements” or “tail” coverage to your current liability policy allows you to make and report claims for prior wrongful acts, errors or omissions after the policy has expired for a specific period of time. There are several instances when this type of coverage is critical. The first is when the insured is changing carriers and “prior acts coverage” is not available or is too restrictive in scope. Secondly, this coverage is even more important when the carrier change is necessitated by the insurer’s refusal to renew coverage and your law firm doesn’t have an alternative yet. There is an additional surcharge for extended reporting coverage.

The other scenario in which this coverage is vital is when a lawyer is no longer actively practicing. When an attorney retires, becomes a judge, or goes from private practice to in-house counsel, the exposures that may arise from the former practice can be covered by “extended reporting endorsements.”

The time to determine what kind of extended reporting your policy provides is before you purchase. Each carrier determines how long an extended period they will provide, under what conditions this coverage can be purchased, and the cost for such an endorsement. In some cases, the coverage is sold in multiples of the policy premium; while in other cases, the cost is the rate that is in effect at the time the endorsement is purchased.

So-Called “Rugged” SUVs Sustain Costly Damage in Minor Accidents

Let’s say you are in your 2003 Honda Pilot SUV backing out of a parking space and accidentally back right into another car.  Or you’re driving your 2003 Chrysler Pacifica into a gas station and you swipe a low pole you did not see.  Or you are in your 2003 model Infiniti FX35 or your Cadillac SRX accelerating after coming to a complete stop and another vehicle slams into you.  What do all these accidents have in common?  They involve midsize SUVs driving slowly that sustain major bumper damage. It may come as a shock to learn that these seemingly minor fender benders can result in repair costs as high as $2,814.     

To look at the advertising, you would think SUVs are rugged, but the truth is few have bumpers designed to withstand even a minor bump in a low-speed collision. Eight of nine 2003 midsize SUVs earned poor or marginal ratings for bumper performance in 5 mph crash tests conducted by the Insurance Institute for Highway Safety. Among the nine vehicles tested only the 2003 Honda Pilot is equipped with bumpers that resisted major damage. The Pilot earned an acceptable rating. The 2004 Mitsubishi Endeavor, 2003 Nissan Murano, and 2004 Lexus RX 330 are all rated marginal. The 2003 Toyota 4Runner, 2004 Chrysler Pacifica, 2003 Infiniti FX35, 2004 Cadillac SRX, and 2003 Kia Sorento are all rated poor.

The Institute’s series of four bumper tests includes front- and rear-into-flat-barrier plus front-into-angle-barrier and rear-into-pole impacts. The tests assess how well bumpers can prevent damage in 5 mph impacts simulating the fender-bender collisions that are common in commuter traffic and parking lots. A good bumper system absorbs the energy of these minor impacts and protects expensive body panels, headlamp systems, and other components from damage.

Most of the tested vehicles sustained major damage in minor collisions at a fast walking speed.  Average damage per test ranged from about $400 for the Pilot to more than $1,600 for the Sorento and SRX. Of the 33 current midsize SUVs the Institute has tested for bumper performance, 23 are rated poor, 6 are rated marginal, and 4 are acceptable. None of those tested are rated good.

Three of the poor performers had the largest damage costs in the rear-into-pole test. The rear bumpers on the Chrysler Pacifica, Cadillac SRX, and Kia Sorento were not robust enough to keep damage away from the vehicles’ body parts and sheet metal.  Repair costs in the pole test were about $2,200 for the Sorento and more than $2,800 each for the Pacifica and the SRX. In each case, the tailgate was crushed and needed to be replaced.

The Sorento and SRX were the worst performers overall: Damage to these two vehicles totaled more than $6,500 in all four tests. Even in the front and rear flat-barrier tests, which are the least demanding because the crash energy is spread across the whole bumper, the Kia had repair bills of more $1,000.                       

Infiniti FX35 and Toyota 4Runner also rated poor. After the front-corner test on the Infiniti, more than $2,000 damage was calculated — much of it under the bumper cover. The bumper bar was cracked and bent, the radiator support was broken, and the headlamp assembly needed to be replaced. In the same test on the 4Runner the right fender buckled and the headlamp was crushed in part because the bumper is too short and leaves the corners of the front end unprotected.

The Honda Pilot was the only SUV tested that the Institute rated as having acceptable bumpers. Only the Pilot is equipped with bumpers that did a reasonable job of preventing damage to the vehicle.                   

There are the same inadequate bumpers on many other vehicles.  Of course, auto insurers must factor in the high risk of expensive bodywork for minor accidents when they set insurance premiums, so these costs get passed along to consumers in their auto insurance premiums.  “It’s not difficult or expensive to build a decent bumper,” says Adrian Lund, the Institute’s chief operating officer. “The Honda bumper system isn’t great, but it’s the best of a sorry lot. It shows that manufacturers can build SUVs with bumper systems that prevent costly damage in a minor collision.”

What Factors Influence Malpractice Premiums?

According to a November 2005 article published in the Insurance Journal entitled, “How to Write the Diverse Business of Lawyers Professional Liability,” between $1.5 and $2 billion is spent annually on Professional Liability coverage. With numbers such as these, it is important that any firm in the market for this insurance understand the factors affecting coverage rates.

Determining premium rates is a complex matter based on a combination of factors. However, there are two main factors insurers review when underwriting an insurance application. The first is your geographic location, because each state has a different risk assumption.  The level of risk is measured by the number of suits brought against other lawyers in your area. The second important factor is your practice area(s). You can expect to pay more for coverage if you specialize in high-risk areas such as securities, banking and/or real estate.

Other factors that insurers consider include:

  • Liability limits and deductibles selected
  • Breadth of coverage desired (prior acts, extended reporting, etc.)
  • Number of attorneys covered
  • Personal claims history of your firm’s attorneys
  • Length of time covered attorneys have been associated with your firm
  • Number of malpractice prevention controls utilized by your firm

The length of time covered attorneys have been associated with your firm is important, because insurers typically use step rates to calculate premiums for a new attorney.  Risk exposure increases during the initial years that an attorney practices as the number of potential plaintiffs increases with every new case. After a certain point, this risk flattens out.  So premium rates on a new attorney will automatically increase in set steps until the risk exposure matures.

It is also important to realize the significance reinsurance holds in determining premiums. Insurance is a way of transferring risk. You transfer risks to an insurance carrier, and the carrier will often transfer some of that risk to another company. By reinsuring, a carrier increases its capacity to underwrite more policies.  When reinsurance rates rise, the increased cost can be transferred to you in the form of higher rates.

Congress Turns on the Floodlights

Recently, Congress passed legislation designed to solidify the National Flood Insurance Program (NFIP) managed by the Federal Emergency Management Agency (FEMA).  This legislation comes after the program, founded in 1968, was extended for a year in January of 2003.  The new legislation will extend the program for five more years while making some important changes to staunch the flow of red ink caused by repeat claimants in flood-prone areas.  

Some of the changes Congress hopes to encourage are remedial in nature.  For example, $40 million a year has been authorized to pay for elevation, relocation, demolition and flood proofing of homes in flood zones that have been the subject of repeat claims.  Under the new legislation, the government would pay 90% of flood proofing costs, and the property owner would pay 10%.  The remediation would be optional for the homeowner, but the alternative would be bleak.  According to the Associated Press Online, one study reported that the subsidized NFIP plan costs insureds only about 38% of actuarial risk rates, costing the government about $200 million a year. Under the new plan, refusal to accept the government’s “mitigation” offer would end the subsidy for the property owner, resulting in a significant increase in flood insurance premiums.

Dissenters in Congress include Rep. Billy Tauzin, a Lousiana Congressman, who complained that the bill unfairly targets his constituency, noting that those who live in earthquake or tornado prone areas are not similarly penalized.  

The bill targets the most prolific claimants in the NFIP program. There are 48,000 properties that, within a 10-year period, have experienced multiple flood claims exceeding the deductible by at least $1,000, accounting for 25 – 30% of all claims.  Of those, the program targets the 10,000 properties that top the list for frequency and severity of claims.  Also targeted are homes whose multiple claims over time have totaled more than the value of the insured property.

With the spotlight (or floodlight?) on flood insurance, now may be a good time to review your strategy for managing your business or home’s exposure to floods, the most common disaster scenario in the US according to FEMA.  But do not make the assumption that disaster-relief will be available, obviating the need for flood insurance.  Less than half of flooding events are declared disasters, says FEMA, often leaving insurance the sole source of compensation for victims.

Flood insurance is available to protect homes, condominiums and nonresidential buildings including farm and commercial structures in participating communities.   It’s important to find out whether or not your community participates in the NFIP program, thereby making you eligible for flood insurance under the plan.   

Another important consideration is to buy insurance before an imminent flood.  Although you can buy coverage just prior to a flood, there is a 30-day waiting period before the policy becomes effective unless the flood map for your community was revised in the last year or the insurance is required to close a loan.

It is a commonly held belief that homeowner’s insurance covers floods.  While certain water damage may be covered under a homeowner’s policy, by and large most flood exposures are uncovered by any other policy (with the possible exception of an excess or umbrella policy specifically stated as excess above an NFIP backed policy).

The NFIP defines flooding as a general and temporary condition during which the surface of normally dry land is partially or completely inundated. The cause of flooding can be:


  • Overflow of tidal waters or inland waters;
  • Runoff, such as from rainfall;
  • Mudslides or mudflows caused by flooding; or
  • Collapse of land along a body of water from erosion exceeding normal levels.


To find out more about flood hazards, steps to take to mitigate flood damage or to deal with the after-effects of a flood in your community, check out the FEMA website at  Naturally, if you have any questions about flood insurance available for your home or business, call us for details.

Worker Found Eligible for Compensation from Seizure Related Injury

In an August 2006 ruling, Connecticut’s Supreme Court ruled that the claimant in the case of Michael G. Blakeslee Jr. vs. Platt Brothers & Co, who was injured when co-workers tried to help during a seizure, is entitled to workers’ compensation benefits. Typically, workplace injuries caused by a seizure wouldn’t be eligible for compensation because the injuries arise from the medical condition itself and not from conditions in the work area. In the Blakeslee case, the claimant received two dislocated shoulders on February 13, 2002, when three co-workers tried to restrain him during his seizure. He had fallen near a large steel scale, and then started flailing his arms and legs as he regained consciousness.

The claimant filed a workers’ compensation claim contending that because the actual injury resulted from the restraint, and not the seizure itself, the shoulder injuries should be covered. The claimant argued that an injury received during the course of employment is eligible for compensation even if infirmity due to disease originally set in motion the final cause of the injury. The claimant also asserted that an injury inflicted by a co-employee is eligible for compensation, unless the injured employee engages in unauthorized behavior or the injury is the result of an intentional assault.

Initially, a workers’ compensation commissioner decided that Blakeslee was not entitled to workers’ compensation benefits. The commissioner determined that the claimant’s injuries resulted from a chain of events set off by a grand mal seizure unrelated to his employment. A workers’ compensation review board agreed with the finding. The review board stated that there is a prerequisite requirement for eligibility for compensation, which the claimant overlooked. The cause of the injury must arise out of the employment and work conditions must be the legal cause of the injury. The review board contended that the claimant’s seizure caused the need for first aid, which caused the injury. There was no element of the claimant’s employment involved.

Five out of seven Supreme Court justices reversed the board’s ruling. They were not persuaded by the argument posed by Platt Brothers, and the employer’s insurer, Wausau Insurance Co., that finding for the defendant would be in direct opposition to public policy because it would prevent employees from assisting co-workers in future medical emergencies. The majority noted that the co-workers restrained Blakeslee to keep him from harming other employees as well as himself. Their actions benefited the employer. The action was directly related to the employment and would therefore be eligible for compensation.

The two dissenting justices argued that the Supreme Court should not have accepted review of the case.

Tips to Help Drivers Avoid Deer Collisions

When Mary Smith relocated from a densely populated area of Los Angeles to rural Kentucky, she expected her auto insurance premium to go down considerably.  After all, she reasoned that with far fewer cars on the road the risk of accidents must be lower.  Mary was stunned to find that her auto insurance premium in Kentucky was just about the same.  “How can this be?” she asked.  A big part of the answer came down to one word:  deer.

In many states the continuing explosion in the deer population has lead to a corresponding increase in deer related collisions.  And, there does not appear to be an end in sight, because the deer population continues to grow and urban habitats continue to spread to previously rural environments.

Drivers are indemnified for deer/car collisions under the comprehensive section of their auto insurance, which covers “contact with bird or animal.”  Although these accidents usually cost less than $2,000 per claim for repairs and injuries, costs can run as high as $8,000 or more depending on the vehicle and extent of damage.  According to research by the Insurance Information Institute (III), auto insurers paid nearly $1 billion in deer related claims in 2002.  Ultimately, the entire $1 billion is paid from individuals’ pockets in the form of higher auto insurance premiums.  Even worse than property damage and higher insurance rates are the risks of injuries and even deaths from deer/car collisions; approximately 100 people die and 13,000 are injured each year in deer related accidents.

Most car/deer collisions occur between the months of October and December, but a car/deer collision may occur at any time. Most of these collisions occur either between 6:00 PM and midnight or around sunrise.  As expected rural, two-lane roadways are the sites of most incidents, but deer are also commonly found in densely populated areas.

The following are some tips to help drivers avoid colliding with deer:


  • Notice areas posted with deer crossing signs, areas known to have a large deer population, and areas where roads divide agricultural fields and forest lands.  Slow down in these areas.
  • Survey the surrounding fields and roadsides as you are driving.  You will often be able to see deer before they get close to the roadway.
  • If you see a deer near the road, slow down and blow your horn with one long blast to frighten the deer.
  • Keep in mind that if you see one deer there are usually others nearby.
  • Use your high beams if no traffic is approaching. They will illuminate the deer sooner than low beams, allowing greater reaction time. 
  • If a deer should dart in front of your vehicle, brake firmly but stay in your lane.  Do not swerve to avoid hitting it.  This can confuse the deer on where to run.  It can also cause you to lose control.  It is less dangerous to collide with the deer than to collide with another vehicle or a tree, pole, or other roadside object. 
  • Don’t think you are protected from deer/car collisions by using deer whistles or reflectors. According to the Insurance Information Institute, “these devices have not been proven to reduce deer-vehicle collisions.”
  • As always, wear your seat belt for safety and for deer-collision safety in particular.  Most people injured in car/deer crashes were not wearing their seat belts.
  • If you do hit a deer, don’t get out of the car. An injured deer, frightened and wounded, can be dangerous. If the deer is blocking the roadway call the police.        
  • Contact your insurance agent or company representative to report any damage to your car.


DEER / VEHICLE COLLISIONSState and Number of Collisions (1)

Alabama 20,000 average per year
Alaska NA 
Arkansas NA 
California NA 
Connecticut 3,098 (2000)
Delaware 231 (2000) 
District of Columbia NA 
Florida NA 
Georgia 51,000
Hawaii NA 
Idaho NA 
Illinois 22,933 
Indiana 10,904 (1999)
Iowa 13,000
Kansas 9,231
Kentucky 4,000 
Louisiana NA 
Maine 4,055 
Maryland 4,229 
Massachusetts 235
Michigan 66,993 
Minnesota NA 
Mississippi NA 
Missouri 8,112
Montana NA
Nebraska 5,323
Nevada 136
New Hampshire 1,365
New Jersey 20,100 (deer carcasses removed)
New Mexico NA
New York 8,570
North Carolina 12,233 (1999)
North Dakota 3,600
Ohio 31,586
Oklahoma NA
Oregon NA
Pennsylvania 2,564 (2000)
Rhode Island NA
South Carolina 3,326
South Dakota NA
Tennessee NA Texas NA
Utah NA
Vermont NA
Virginia 5,338
Washington NA
West Virginia NA
Wisconsin 45,278(2002)
Wyoming NA 

(1) 2001 data unless otherwise noted
Source:  Insurance Information Institute

Workers’ Comp Employer Costs Rose Faster Than Benefit Payments in 2004

According to a study released in July 2006 by the National Academy of Social Insurance, employer costs for workers’ compensation grew faster than combined cash and medical payments to injured workers in 2004, the most recent year for which data is available. Combined benefit payments for injured workers increased 2.3 percent in 2004 compared to prior year levels, while employer workers’ compensation costs rose by 7.0 percent for the same period.

Combined benefit payments fell by 3 cents for every $100 of covered wages, from $1.16 to $1.13. The chief contributor to this decline was the state of California, where benefits dropped by 10 cents per $100 of covered wages. Nationally, premiums paid for workers’ compensation insurance rose by 3 cents per $100 of covered wages, to $1.76 in 2004. The increase was the smallest annual increase since 2001.

Despite the recent rise in costs, both costs and benefits in 2004 remain far below their peak levels. Total benefits were at their highest in 1992 at $1.68 per $100 of covered wages, 55 cents higher than the 2004 figure. Employer costs were highest in 1990 at $2.18 per $100 of covered wages, 42 cents higher than in 2004.

Since 2000, the rise in benefit payments has resulted from increased spending for medical care. Spending for medical treatment rose from 47 cents in 2000 to 53 cents per $100 of covered wages in 2004. Spending for cash payments to workers remained the same during this period at 60 cents per $100 of wages.

There are specific actions employers can take to curb workers’ compensation costs. The first step is to examine accident records for the past three years. Take each year’s reports and examine as a whole. While reviewing look for specific accident causes and note hazards that should be remedied. You should also be looking for injury repetition and in which department injuries frequently occurred.

The next step is to conduct a physical analysis of the workplace. Utilize your health and safety committee as the catalyst, but be sure workers are also involved. Look for equipment hazards that need replacement or repair. Then search for environmental hazards such as chemical exposures, noise, temperature and ventilation issues.

The third step is to look for task or ergonomic hazards. Request employee input to encourage workers to take ownership of safety in their departments. When workers provide input, make sure actions resulting from their suggestions are documented in health and safety committee minutes and posted on bulletin boards in common areas. If employees do not feel their suggestions matter, they won’t bother to suggest improvements in the future.

Closing the Gap When Your Car Is Worth Less Than You Owe

You probably know that the minute you drive your new car off the dealer’s lot, it loses a significant portion of its value.  If you intend to keep it for at least a couple of years, to get to that break-even point and then sell it, the loss of value may not bother you. 

That loss of value would bother you more, though, if the nearby river overflowed and your new car floated way with everything else that wasn’t bolted down.  You might still owe $20,000 on it.  However, your insurance carrier might cover it for current value and send you a check for only $14,000.  You would end up owing the bank or finance company $6,000 and have no car to show for it. 

Unfortunately, that’s not the worst news.  These days, the big discounts being offered for new car purchases are depressing the value of slightly used cars even more.   That means, in auto industry parlance, that new car buyers who finance their new cars are even more  ‘upside down’ than ever before.  Lately, the average gap between what a car is worth and what is owed on it is $2,200.

In addition to discounting widening the gap, other factors, too, are putting new car buyers in the financial hole.  One of these is the buyer’s tendency to look for longer terms and lower payments.  But the longer it takes to pay for the car, the longer it takes to reach the point at which you owe less than the car’s depreciating value.  Another is the finance industry’s desire to accommodate these buyers, not to mention gain more interest.  In California, some dealers are writing seven-year finance contracts.  (Many people recall when three-year loans were standard, four-year unusual and five-year unheard of. These days, five-year loans are common.)

Dan Kiley, reporting in USA Today, noted that Friendly Chevrolet in Dallas estimates that 90% of its customers are upside-down, often owing as much as $10,000 to $15,000 more than the car is worth at trade-in time.

Gap insurance can fix that.  Some gap insurance policies can also be worthwhile if you simply want to trade the car in during its ‘upside down’ period.

Dealers, becoming more aware of the problems these widening gaps can cause, are beginning to offer gap insurance, usually costing between $500 and $700.  But, some manufacturers, including Honda and Toyota, discount so infrequently that they find only 15% of their customers-versus 90% for some big discounters-are ‘upside down’ and may not offer gap insurance at the dealership. And, in any case, dealer gap insurance may not be as comprehensive as the gap insurance you can find through an agent.

If you finance through a bank or credit union rather than the dealer’s finance company, you probably will not be offered gap insurance, either.  In fact, you may not be able to purchase it through the bank or credit union at all.  Again, the best bet is to check with an agent, who can not only find you the best policy for your situation, but help you assess whether you need it, or would be better off directing those insurance dollars to a more immediate need. And it is likely to be more cost-effective than the insurance offered by the dealer. 

While the insurance product is most often referred to in the press and at dealerships as gap insurance, some companies, such as Progressive Insurance Company, call it loan/lease payoff coverage.  And there might be other names, but your agent will know the ones that apply to the products of companies he or she represents.

If you decide gap insurance is a good idea for your situation-and remember, you would otherwise be self-insuring for losses during the time when your car’s loan exceeded you car’s value-discuss gap insurance with your agent when you start looking for your new car.  You will want to ask your agent to investigate the instances in which a company’s gap coverage would not kick in, and how it would pay if it did.  Some policies pay replacement value for a totaled car, even if replacement value is thousands higher than when you bought the car.  Others pay only the total owed on the car.  And still others pay a percentage of the total owed, leaving you to self-insure for part of that gap.  Some companies also require that you place your collision and liability insurance with them as well, but you may well get a discount for ‘packaging’ all of it; your agent can help you through this

If you think gap insurance is just another little bill to pay, remember this essential fact: having it may make the difference between surviving the loss of a car in good shape, or in great distress.

What Should You Consider When Shopping for Lawyer’s Professional Liability Insurance?

Controlling expenses is an important consideration in the management of any law firm, so it isn’t unusual that a firm shopping for liability coverage would take premium rates into consideration. However, even though rates are important, they shouldn’t be the overriding factor in your decision to purchase a particular policy. There are a number of other aspects you should consider to ensure you receive the best coverage for your premium dollar.

The first of these considerations is whether your policy has eroding coverage.  In some liability policies, the coverage limits include defense costs. When you file a claim, the amount of coverage for settling the claim or paying a judgment against you decreases as you incur defense costs. This type of policy is referred to as having defense costs “inside” the policy. There are policies in which the defense costs are “outside” the policy, which means they are not subtracted from the amount of coverage. In some cases, policies with outside defense costs have a cap after which the defense costs are subtracted from coverage limits.

The second consideration is whether the policy deductible includes defense costs. If the deductible is only applied to liability, the insured firm doesn’t have to pay it until there is a settlement/judgment. However, if the deductible includes defense costs, the insured pays as soon as defense expenses begin to mount until the deductible is paid in full.

Another condition that you will want to note is whether your carrier can settle a claim without your consent. Some policies have what is known as a “hammer” clause that prevents the insurance company from settling without the consent of the insured. There is an extenuating circumstance to this clause in that, if the insured refuses to consent, the carrier is only liable for the amount for which it would have settled.

You also need to determine if your policy gives you the right to select your own defense counsel. More than likely, if you are a small firm your carrier will retain the right to choose your defense counsel. This doesn’t mean that you won’t have any input at all. Most insurance companies have a panel of defense attorneys and generally allow the insured to select from this panel. Larger firms can typically select their own counsel but the carrier must approve.

All current Lawyer’s Professional Liability policies are issued as “claims-made” policies, which means that a claim must be made and reported to the carrier within the life of the policy. To prevent coverage gaps if your firm is changing policies, you should select a new policy that has a “prior acts coverage” clause. This will extend your coverage so that any claims that existed before the new policy started will be covered. If you don’t have prior acts coverage, your former claims-made policy will not cover claims that developed after it expired and your firm will be without coverage for those claims.

A number of changes in both federal and state court procedures have made sanctioning more commonplace. The cost to defend your firm against a sanction or to pay the monetary penalty associated with it can be extremely expensive. That’s why you will want to ensure your liability policy provides coverage for these occurrences.

The final consideration is whether the policy requires a new deductible if there are multiple claims made in the same policy year. Some policies only require the deductible to be applied to the first claim made in a given policy year. Other policies treat the deductible on an aggregate basis. The policy will stipulate a specific deductible dollar amount per claim, with a cap on the total deductible dollar amount in the aggregate that the insured will have to pay before coverage begins. If neither of these scenarios is spelled out in your policy, your coverage most likely requires applies deductible for each claim.