When a law firm is renewing or replacing their current lawyers professional liability policy, there is sometimes a tendency to rush through the application without giving it much thought. But the accurate completion of your LPL application is extremely important for one simple reason: your policy could be cancelled for incorrect information.
If you include false information on your application, the company could use this as a basis to rescind your policy, even if you didn’t personally complete the form, the error was unintentional, and you were completely unaware that any mistakes had been made.
In the initial application, the focus is generally on identifying all information that is necessary to determine a firm’s or lawyer’s malpractice risk and create a basis for the level of premium. When renewing LPL insurance, the emphasis is usually on reporting any changes that have occurred since the last application, such as variations in firm size, geographic location, types of cases handled, and the anticipated risk of a legal malpractice claim being made during the upcoming policy period.
Prior, Known, and Potential Risk
Questions involving the firm’s knowledge of risks are particularly important, and the failure to disclose prior claims, known claims, and potential claims can all prompt an insurer to cancel coverage if the firm cannot provide a complete or accurate explanation of the omission.
Nature and Scope of Practice
For obvious reasons, the firm’s specialty and practice areas are of particular interest to an insurer, and some companies will refuse to insure or impose limitations on certain high-risk practice areas, including intellectual property, securities, or environmental law. Some carriers might refuse to cover a claim based on an undisclosed practice area, or potentially even cancel the policy altogether.
If you have questions regarding an LPL insurance application, contact USI Affinity today.