Category Archives: Insurance Products

Insurance Applications + Lies = Coverage Denied

Insurers are entitled to make decisions as to the professionals they will insure and the terms of the relationship. To that end, insurers expend considerable energy evaluating risks and assessing the likelihood of a potential claim. The scope of underwriting and the key metrics may vary from carrier to carrier but without exception each insurer relies upon some form of insurance application. Insurers are entitled to rely upon the representations of their applicants and, when faced with a misrepresentation in an insurance application, have the right to deny coverage. Accordingly, we’ve cited previous examples of applicants caught in a lie in their insurance applications. Don’t do it. Consider another recent example.

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The DOJ on D&O: What You Need to Know

In September the Department of Justice released its new directive on individual accountability for corporate wrongdoing in a revived effort to fight corporate fraud. The “Yates Memo” by Deputy U.S. Attorney General Sally Quillian Yates, outlines the DOJ’s policy on targeting and pursuing corporate executives in cases of corporate wrongdoing. With the DOJ’s new guidelines companies should be taking a fresh look at their D&O insurance.

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Football Insurance? You Bet

Professional athletes are worth a lot of money. When they are on top of their game they are capable of raking in the dough for themselves and their organizations. However, if they become injured or otherwise unable to perform a lot of money is at stake. Therefore, it’s not unusual for athletes to obtain disability insurance policies, covering them in the event of a career ending injury. In fact with respect to collegiate athletes, the NCAA even sponsors a disability insurance program, which provides protection for qualified athletes against future loss of earnings as a professional athlete, due to a disabling injury or sickness. Of course in order to make the transition from collegiate athlete to professional you must first be drafted, and that’s where loss of value insurance comes into play.

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Malpractice: Failure to Report Client’s Claim

There is no upside to failing to report a claim. You’ve been warned of the consequences facing professionals who take a wait and see approach or apply self-help measures before reporting. In some cases the professional may consider the claim meritless and therefore think that it doesn’t give rise to a “reportable” event. Other professionals, usually attorneys, may attempt to handle the claim on their own before notifying the carrier. In these scenarios, the carrier may elect to deny coverage and the insured is left to pay the bill. An interesting wrinkle to this theme may apply when the insured is represented by counsel before or during an event that may trigger coverage. What reporting responsibility falls on counsel?

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Double Covered but Uninsured

Prudent professionals maintain different types of insurance to protect against various risks. Some typical policies for professionals may include D&O, cyber, and/or E&O policies. The foregoing policies and others may overlap, while others allow gaps for claims that would not be covered. It is incumbent upon each professional to purchase the perfect mix applicable to her practice; there is no one size fits all and more is not necessarily sufficient. Although multiple policies may fit together seamlessly to form a safety net, other policies allow for gaps in coverage that could result in out-of-pocket exposure.

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Application of the Innocent Insured Clause

Professional Liability Matters has repeatedly stressed the importance of accurate, timely and careful reporting of potential claims. Whether it be during the application or renewal process or somewhere down the road, most insureds are contractually obligated to report threatened claims. This requires that the organization solicit responses from all professionals (which can be a logistical problem for larger organizations). Many firms submit a short questionnaire that must be answered by everyone. But how is coverage implicated for the organization when one bad apple knowingly conceals a claim?

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HOA Lessons from Sanford, Florida

Since Trayvon Martin’s February 2012 death, HOA liability and neighborhood watch groups have become a bit of a hot button topic. Following Martin’s altercation with George Zimmerman in the Florida housing complex known as The Retreat, Martin’s parents initiated a wrongful death suit against the HOA. Reportedly, that lawsuit recently settled for approximately $1 million. Now, some HOAs are rethinking risk management strategy and have taken a closer look at neighborhood watch groups in particular.

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Eroding Policy Limits Spur Litigation

Professional liability insurance policies each contain limits of liability that set the upper threshold that the insurer will fund. However, a policy’s stated limit does not necessarily correlate to the amount that will be available to resolve a claim. Instead, many policies provide that the costs of defense are included within the coverage limit—every dollar spent on defense correspondingly erodes the amount available to resolve the claim. These so-called eroding limits, or defense-within-limits policies become particularly important in heavily litigated cases, where high defense costs can approach, and sometimes surpass, the total limit of liability.

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Stop; Hammer (Clause) Time

Litigation is big business with big dollar signs. As a result of the large awards that can result from malpractice suits, many professionals, their attorneys, and insurers are interested in early settlement discussions. When considering settlement, the defense team must balance “right and wrong,” pride, defense costs, and other complicated factors that are difficult to quantify. For the professional, the decision may be more about reputation and morals than budgets. As a result, insureds may not always want to follow their insurer’s inclination to settle. Enter the “hammer clause.”

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Does Malpractice Insurance Cover Fee Disputes?

You may be surprised to learn that some professional malpractice policies do not cover fee disputes. Professional liability insurance is an essential component of every professional’s practice, helping to mitigate risk in malpractice actions.  But many professional liability policies may leave professionals to fend for themselves in one of the most fundamental aspects of the practice: collecting fees for services rendered.  This limitation was recently highlighted by Louisiana’s Western District Court in Pias v. Cont’l Cas. Co., No. 2:13-cv-00182 (W.D. La. Aug. 6, 2013).…

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