Unsure If You Need to Report a Situation to Your Malpractice Insurer ? Here ’ s a Checklist That Might Help
By Mark Bassingthwaighte
Here at ALPS , all of us who work in claims and risk management periodically take calls from lawyers unsure if they need to report a claim . While we view reaching out for assistance in working through this important decision as a good thing , we also recognize some lawyers will choose not to if , for no other reason than , they are afraid doing so might have negative repercussions . If you ever find yourself facing a situation of concern , and are hesitant to reach out to your insurer , the following short checklist of things to think about may prove useful . Hopefully , it will help you decide for yourself if a report needs to be made .
u What to report – All claims , regardless of the merits of the allegations . A claim is often defined as any demand for money or services to include , but not limited to , demand letters , being served with a lawsuit , or the institution of an alternative dispute resolution process . And all potential claims . Think about any actual or alleged wrongful act , which is typically defined as any error , act , or omission in professional services that you know or reasonably should know could be the basis of a claim or suit covered under your policy .
u When to report – Malpractice policies , which are claims-made and reported policies , generally require timely , if not immediate , notice of all claims and potential claims , and again , regardless of the merits of the allegations . Unlike occurrence-based policies , notice is what triggers coverage , not the underlying act , error , or omission that is the basis of the claim . If you are aware of an actual or potential claim , the time to report has arrived .
u How to report – Many policies require that notice be in writing . Regardless , notice is intended to let the insurer know the basics of what the issues are . Briefly detail the specific misstep that occurred or is being alleged , identify the client , and provide the relevant date . Notice can be as short as a paragraph , depending on what the error or the potential error was . u Why report – Failing to timely report a claim in accordance with the contractual obligations set forth in your malpractice policy is similar to trying to hide awareness of a claim while applying for coverage or reapplying for continuous coverage . The consequences of not doing so , which include the possible loss of coverage for the claim and / or rescission of your policy , can be severe .
u Remember that you have a contractual obligation to cooperate with your insurer – While the specific language of cooperation clauses will differ between insurers ; all provide that you must cooperate with them in the defense of the claim or suit . Of particular importance is this . You don ’ t want to make any payments , admit any liability , settle a claim , assume any obligation , or incur any expense absent your insurer ’ s prior consent . Stated another way , trying to resolve a claim on your own before finally deciding to report it is a bad idea .
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Further , by making this publication or document available , ALPS is not rendering legal or other professional advice or services and this publication or document should not be relied upon as a substitute for such legal or other professional advice or services . ALPS warns that this publication or document should not be used or relied upon as a basis for any decision or action that may affect your professional practice , business or personal affairs . Instead , ALPS highly recommends that you consult an attorney or other professional before making any decisions regarding the subject matter of this publication or document . ALPS Corporation and its subsidiaries , affiliates and related entities shall not be responsible for any loss or damage sustained by any person who uses or relies upon the publication or document presented herein .
ALPS Risk Manager Mark Bassingthwaighte , Esq . Since 1998 , he has been a Risk Manager with ALPS , an attorney ’ s professional liability insurance carrier . In his tenure with the company , Mr . Bassingthwaighte has conducted over 1,200 law firm risk management assessment visits , presented over 400 continuing legal education seminars throughout the United States , and written extensively on risk management , ethics , and technology . Mr . Bassingthwaighte is a member of the State Bar of Montana as well as the American Bar Association where he currently sits on the ABA Center for Professional Responsibility ’ s Conference Planning Committee . He received his J . D . from Drake University Law School .
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