Reporting a malpractice claim can be scary. It can create stress wondering about renewal premiums increasing or the possibility of not being renewed. The fear is that the claim will make you less insurable in the eyes of Professional Liability carriers. Sometimes these concerns are valid, but more oftentimes they are not.
The carriers have seen almost everything. And they have dedicated claims representatives and defense panels in place just for this reason. In fact, many of their claims representatives are attorneys.
You should always report any matters, or potential matters. This preserves your right to report to the carrier if done in a timely fashion and we’ll explain why.
Stephen Dimiceli helps attorneys understand how to obtain Professional Liability Insurance, and how to most effectively utilize the coverage they offer. He sat down for an interview and talked through how and when attorneys should think about reporting a claim.
Stephen tackles the following questions in this blog:
Simple answer. Immediately. That’s why you have insurance. Many carriers have time deadlines for reporting potential and actual claims. Not adhering to these guidelines could result in the claim being denied due to “prior knowledge” or “failure to report in a timely manner”.
The earlier you get your carrier on the case, the better the odds are of having a favorable outcome. If the carrier can get counsel for the two sides communicating quickly, then they can start working out an agreement to help mitigate the exposure.
Some policies have benefits that cover the first $25,000 of defense costs before your deductible would be due. They do this to encourage attorneys not to hesitate to report a claim for fear of having to pay out their deductible. Carriers know the longer a case drags on the higher the costs will go, so the earlier you can get the claim reported, the better. If the carrier is brought in quickly, many claims are settled successfully for less than $25,000 in expenses and/or defense costs. This means the attorney would have no out-of-pocket expense for policies with this benefit. Sometimes you can purchase this for an additional premium.
Absolutely not.
The attorney may think “It’s only going to cost me $5k to $10k to deal with it on my own. I don’t want to report it to my carrier and pay higher premiums. I’ll just make it go away myself”.
However, often the “time expense” of representing oneself vs. the income you could be earning during that time is not considered.
Attempting to handle a malpractice suit on your own causes you to fail to report it promptly. That typically leaves you unable to report the claim to the carrier later. Because the carrier can then deny coverage due to “prior knowledge” or “failure to report in a timely manner.”
Handling a matter on your own will not prevent you from having to report the matter on future applications. It’s not of importance if the matter was successfully tried or settled. Nor does it matter that there was no carrier involved or monetary cost to the carrier. Future applications will simply ask if there have been any claims against you and the amounts of the defense and damages awarded. It’s inescapable.
For this, and multiple other reasons, it is always in your best interest to report the matter as soon as you are aware of it and let the carrier do the heavy lifting. That is what you purchased the policy for in the first place.
Your Professional Liability Insurance carrier is on your side. You have the same goals: to minimize liability and mitigate the claim damage. View them as the partner they are and involve them as early as possible in claims or potential claims. Read the claim reporting section of your policy thoroughly to make sure the matter is reported in accordance with any time deadlines in your policy. And always cooperate with the claim counsel that is assigned to your matter.
Price vs. Value: Making Informed Choices When Shopping for Lawyers Professional Liability Insurance
Make informed decisions when it matters most by knowing how to handle a malpractice claim, when to report it to your carrier and how prompt reporting impacts both your practice and the insurance carrier.
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