AIM will sell an individual insured (who has been underwritten as an insured) tail coverage without requiring all attorneys in an insured firm to buy it as well. Competitors normally require all attorneys in a firm to purchase tail coverage. In a large firm, this effectively prohibits one attorney who is leaving the firm from buying tail coverage.
If an associate leaves a firm, will any acts, errors and omissions on his part (which occurred while he worked for the firm) be covered by my current and future AIM policies, or do I need to purchase additional insurance?
It is not necessary to purchase an extended reporting endorsement to cover future claims which may arise due to actions of an associate while he was in practice with your firm. Your AIM policy provides coverage for any lawyer who was in practice with your firm, while acting solely on behalf of your insured firm and within his capacity as an attorney.
If I am a sole practitioner retiring from the practice of law, how do I protect myself from any unknown acts, errors or omissions resulting from my practice of law?
Your AIM professional liability policy is written as a "claims-made" form and all coverages cease as of the expiration date. If you choose not to continue coverage, you may contact AIM for the "Extended Reporting Endorsement." This endorsement provides coverage for claims reported after the expiration date, subject to the terms and conditions of the policy. The request for this endorsement and payment therefore must be made within thirty (30) days from the policy's expiration date.
When does "tail" coverage become necessary?
Professional liability policies are written on a "claims-made" form and all coverages cease as of the expiration date. Tail coverage (an extended reporting endorsement) provides coverage for claims reported after the expiration date of the policy. Tail coverage may be necessary when a claims-made policy is replaced or rewritten subject to an advanced retroactive date (which bars coverage for certain years). Tail coverage is most frequently requested when the claims-made policy is cancelled or not replaced (e.g., when an attorney retires or leaves the private practice of law).
Can a non-AIM insured purchase the Extended Reporting Endorsement (tail coverage)?
Generally, in cases of cancellation or non-continuation of the policy by either the named insured or the company (except for the insured's non-payment of premium), an AIM insured firm and scheduled individual lawyers insured who are also "members" of the company have the right upon payment of an additional premium, to purchase the Extended Reporting Endorsement. Non-AIM insureds cannot purchase the "tail" endorsement from AIM, but must purchase it from their present carrier.
If an attorney in a law firm leaves and begins practice as a sole practitioner or with a new firm, does he need prior acts coverage under a new malpractice policy?
In order to be eligible for full prior acts coverage under a new policy, one must be a majority successor in interest to the assets and liabilities of the predecessor firm(s) as named in the application for malpractice insurance. One attorney leaving a firm normally does not fit this definition. There are, however, two means by which he can enjoy tail coverage. The first is under his former firm's policy. In general, a former firm's policy provides coverage for an attorney who practiced with that firm and left. This is the case provided the former firm continues its malpractice insurance coverage. The attorney's coverage is only for acts, errors and omissions made while acting on behalf of the former firm up to the time the attorney left. If the former firm later discontinues its coverage, the attorney who left also becomes uninsured. This brings us to the second means of providing prior acts coverage. Insureds who are also "members" of AIM can purchase tail coverage when leaving their firm if they are concerned that their former firm may not continue its malpractice insurance coverage.
Does the extended reporting endorsement extend the policy period?
An extended reporting endorsement (tail) merely extends the time to report or make claims; it does not extend the period during which covered occurrences may take place. Therefore, no coverage would apply under a lawyers malpractice policy if the act, error or omission occurs after the expiration of the claims-made policy, even if it occurs during an extended reporting period.