(March 2017)

INTRODUCTION

ISO introduced this policy in 2011 still; most carriers writing this coverage are using their own proprietary forms. Until it becomes more commonly used through this form can be used as an excellent comparison form when reviewing coverage offerings from a variety of carriers because it does contain coverages that a consensus of experts agrees are important to a lawyer. The policy starts with clear notice about two very important issues:

Similar to other policies, the term you or your refers to the named insured and the term we, us or our refers to the insurance carrier providing coverage under this policy. These are not the only defined terms. The reader is referred to Section VIII- Definitions for other defined terms.

SECTION I – LAWYERS PROFESSIONAL LIABILITY COVERAGE

A. Insuring Agreement

1. The insurance company agrees to pay amounts the insured is legally obligated to pay as damages because of a wrongful act. However, this insurance must cover the wrongful act.

The insurance company not only has the right to defend any suit brought against the insured, it also has a duty to do so. That duty, which can be very expensive, does not apply to suits brought for wrongful acts that this insurance does not cover.

The insurance company decides which incidents of wrongful acts are investigated. This is very important because Section VI–Conditions states that the named insured is required to report all incidents of wrongful acts. The insurance company receives that information and decides when and if it will investigate such incidents.

The insurance company can settle any claim that may result from an incident. However, the named insured must agree, in writing, to any settlement prior to its being made. This is important to protect the reputation of the insurance agent. However, it is not without consequence.  Section VI-Conditions B. Consent to Settle explains that  the insurance company does not pay more on the claim than the amount it could have settled for but didn’t because of the named insured’s refusal.

The amount this policy pays is in accordance with Section IV–Limits of Insurance. The insurance company no longer has a duty to defend once payments for defense costs and/or for damages under this policy use up the limit of insurance. 

The only additional obligations that the insurance company has beyond what is described above, are those items specifically described in Paragraph C. Supplementary Payments.

2. Wrongful act(s) that this policy covers must meet all of the following conditions:

Note: Items 3 and 4. below explain what this means.

3. The date a claim is deemed to have been received by the insurance company is important because that date determines coverage. It is the earliest of the following:

A claim that the insurance company receives from an insured within 30 days following the policy period is considered received within the policy period. However, this grace period does not apply if there is an Extended Reporting Period in effect or if another policy is in effect.

4. The named insured cannot simply wait for a claim to be presented. It has a responsibility to notify the insurance company whenever a situation arises and the named insured can reasonably conclude that a claim against this policy might occur. The claim date is the date that the situation is reported to the insurance company.

5. All claims brought by the same person for multiple wrongful acts are considered a single claims and the date of all claims is the date of the claim first reported.

6. All claims that result from the same wrongful act or from an interrelated wrongful act are considered a single claim. The date of that single claim is the date on which the first claim was reported.

Related Court Case: Law Firm's Failure to Give Notice during Policy Period When Claim Was Made Negate Coverage

SECTION VIII–DEFINITIONS

Defined words are used throughout the policy. Restricting their meaning to the definition in the policy gives all parties a clearer understanding of the coverage intended. Twenty-three terms are defined.

A. Advertisement

This is a published or broadcasted notice to the general public or specific market segments concerning the named insured's goods, products, or services in order to attract customers or supporters. Published notices include material placed on or in the Internet and other electronic forms of communication. Websites are not considered an advertisement. However, notices on websites that provide information about the named insured's goods, products, or services in order to attract customers or supporters are.

B. Application

The application provided is part of this policy. It includes all attachments, addendums, and any other material submitted to the insurance company along with the signed application.

C. Bodily Injury

This is bodily injury, disability, sickness, or disease a person sustains. Death that results from bodily injury, sickness, or disease is considered bodily injury whenever the death occurs.

Mental injury, anguish, or tension; emotional pain or suffering, and shock are all considered bodily injury regardless of how they occur.

D. Claim

A claim is any of the following:

A request by an insured to enter into a tolling agreement (defined below) is also a claim but only if it is related to professional services being rendered or that should have been but were not rendered. 

E. Coverage Territory

The United States of America, its territories and possessions, Puerto Rico, and Canada

Coverage territory is also other parts of the world but only if the insured's responsibility to pay damages is determined in a suit based on the merits in the territory described above or in a settlement agreed to by the insurance company.

F. Defense Expenses

Note: This definition is very important because while these expenses are paid by the insurance company their payment reduces the limit of insurance available to pay damages.

The following payments that are made by the insurance company and allocated to a specific claim:

Note: This is very open-ended which could lead to arguments and litigation if the limits of insurance become exhausted. 

Note: In the CGL attorney fees and attorney expenses that are taxed are not part of this item but there is no mention in this policy.

Salaries and expenses of the insurance company employees are not considered defense expenses. Salaries and expenses of the insured’s employees are also not considered defense expenses but only while acting as insureds.

G. Discrimination

Federal, state, and local rules, regulations, and statutes provide a list of physical characteristics that, if used in making a decision, is considered a violation of that individual’s civil rights. Examples include gender, mental condition, religion, marital status, race, and age.

H. Employee

The term employee is broadened to include leased workers and temporary workers. It does not include independent contractors.

I. Fungi

This is any type or form of fungus as well as scents, spores, and by-products that fungi release. Mold, mildew, and mycotoxims are all considered fungi.

J. Insured

Section III–Who is an Insured identifies the parties that qualify as an insured. All insureds are treated equally and separately except when applying the limits of insurance.

K. Interrelated wrongful act

This is any wrongful act that occurs or results from the same circumstance or allegation and becomes the basis of a suit or a claim.

L. Leased Worker

A person that a labor leasing firm leases to the named insured under a written contract or agreement to perform duties related to conduct of the named insured's business. Temporary workers are not considered leased workers.

M. Named Insured

An individual or entity listed on the declarations. There can be more than one entity and/or individual named on the declarations.

N. Personal and Advertising Injury

Any injury that arises out of one or more of the following offenses:

O. Policy period

The policy period begins on the inception date on the declarations. It ends on the expiration date on the declarations unless there is an earlier termination or cancellation date.

P. Pollutants

Pollutants include irritants and contaminants such as smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste of a solid, liquid, gaseous, or thermal nature. Waste includes property to be disposed of, as well as property to be recycled, reconditioned, or reclaimed.

Q. Predecessor organization

Any organization named as such on the application in which the named insured has the majority interest in its assets and liability. It must engage in professional services as this policy defines.

R. Professional services

Only services that are provided by an insured as part of the named insured’s practice of law are considered professional services. However, not all such services an insured performs are considered professional services. The first requirement is that the services require a license and that the insured have that required license. The second requirement is that the services must be of a fiduciary capacity such as any of the following but not limited to only these:

S. Property Damage

Property damage is physical injury to tangible property and all resulting loss of use of that property. Loss of use of tangible property is property damage even if the property is not physically injured. Loss of use is considered to have occurred at the time of the injury or occurrence that caused it.

Occurrence within this definition means an accident, including repeated exposure to essentially the same harmful conditions.

When electronic data is lost or is damaged it is considered a property damage loss. Electronic data is used with electronically controlled equipment and consists of information, facts or programs. The data is created and transported using software and is stored on various types of media.

Note: Property damage is excluded under this policy. However, this definition does not match the property damage definition in the CGL. The CGL property damage definition specifically states that electronic data is NOT tangible and therefore is NOT part of property damage. This modification of the traditional property damage to add electronic data means that damage to electronic data is excluded. Property damage to electronic data is also excluded in the CGL but that is handled in the more straightforward approach of actually providing an exclusion rather than hiding it within the definitions.   

T. Suit

This is a civil proceeding that alleges damages because of a covered wrongful act. Arbitration proceedings and any other types of alternative dispute resolution proceedings to which the insured submits to with the insurance company's consent are also considered suit. All sorts of governmental administrative hearings are also considered suits if the body has legal authority over the issues from which damages are being claimed.

U. Temporary Worker

Any person furnished to the named insured as a substitute for a permanent employee. The employee the temporary employee substitutes for must be only temporarily away from work. A person being furnished for seasonal or short-term needs is also a temporary worker.

V. Tolling Agreement

An agreement that suspends, for a particular cause of action, the time period during which a suit must be filed.

W. Wrongful Act

There are five requirements for a wrongful act: