a claim in accordance with the policy provisions of the final policy that was in force . Problem solved .
In contrast , prior acts coverage is really about making sure you have retroactive coverage for any missteps that occurred in prior policy years . Think about it this way . Malpractice policies are claims made and reported policies , which , at a most basic level , means they provide coverage for claims that arise and are reported during the policy year . However , there ’ s a problem , is there not ? Malpractice claims often don ’ t arise in the same year the actual alleged misstep occurred . Prior acts coverage solves this problem by establishing a retroactive coverage date that defines how far the back coverage goes under your current policy . Here ’ s a really simple way to look at this . In essence , tails extend coverage for a defined period into the future , and prior acts extends coverage for a defined period into the past , which brings me to my final story .
Sometime ago , I had a conversation with an attorney who proudly proclaimed he had figured out the game insurers play and was saving tons of premium dollars as a result . His approach was to buy a new policy every year from whatever carrier offered the lowest premium for his desired limits . The cheapest policy also always came without prior acts coverage ; and crazy as it sounds , in his mind that wasn ’ t a problem . It wasn ’ t too much further into the conversation that I understood his reasoning . Having never read the policy language of any of his policies , he incorrectly assumed his malpractice policy works like his homeowners and auto policy do . Of course , because a malpractice policy isn ’ t an occurrence-based policy , it doesn ’ t ; but that ’ s a conversation for another day .
For me , there are two takeaways here . First , one should always have prior acts coverage in place , which means a malpractice policy that includes coverage for prior acts will need to be purchased year after year in order to maintain a retroactive coverage date that goes all the way back to the inception date of the first policy you had coverage under . Second , if and when a transition of any type appears on your horizon and you find that coverage for your prior acts may not be available on a going forward basis , it ’ s time to think about getting a tail .
ALPS Risk Manager Mark Bassingthwaighte , Esq . Since 1998 , he has been a risk manager with ALPS , the nation ’ s largest direct writer of professional liability insurance for lawyers . In his tenure with the company , Mr . Bassingthwaighte has conducted over 1,200 law firm risk management assessment visits , presented numerous 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 JD from Drake University Law School .
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