Ask the Underwriter: I need to add coverage for this new area of practice I'm adding at my firm. What do I need to do to make sure I'm covered?

Last summer, we began a series in our ‘Ask the Underwriter’ column to help you better understand your lawyers’ professional liability (“LPL”) policy form. Our aim is to cover the basics and address some common misconceptions – giving you a better understanding of your coverage before problems arise and you need to use it. First, we covered the LPL coverage form. Next, we discussed prior acts coverage. Then, we addressed tail coverage. 

This month, we will address a misconception that comes up frequently. The phone call goes something like this – “Ben, I need to add coverage for this new area of practice I'm adding at my firm. What do I need to do to make sure I'm covered?”

For those of you who handle the LPL insurance for your firm, you will recall that the application you fill out each year asks for a breakdown of your firm’s practice areas, and the breakdown must total 100%. So, each year, you look back at your gross billable receipts and fill in your practice area percentages. The misconception from this is that the policy only covers those practice areas listed on your application. 

The breakdown of your areas of practice is used to evaluate the exposure presented by your firm and to price that exposure appropriately. While some companies may exclude or not include coverage for certain areas of practice which they then have to add by endorsement for additional premium, the AIM LPL policy covers every area of practice. Thus, coverage does not have to be “added” for the new area of practice you add to the services provided by your firm.

Though coverage does not have to be added for new areas of practice, it is best practice for you to advise your insurance company when undertaking a new practice area during the policy period. This allows your underwriter to evaluate and address any material change the new practice area or areas present and for notations to be made in your file should a claim arise. At the next renewal, you would then have the opportunity to update your practice area percentages. 

As always, do not hesitate to reach out should you be considering adding a new practice area to the services you offer or if you have any other questions in general: ben@attorneysinsurancemutual.com.