COVID-19 has brought with it many uncertainties. As the world adjusts to its new work life, many of us are left with questions about how the changing conditions will impact our businesses.
The pandemic has caused unprecedented changes to how and where you do business. As a lawyer you may have a lot of questions right now about various aspects of your practice. While we may not have all the answers today, we want to do our best to provide the answers we do have, especially when it comes to your professional liability insurance.
It’s important not to worry how these changes could affect your professional liability policy but rather, focus on obtaining the knowledge to make the best decisions for your business.
Right now, it is unclear how or if COVID-19 will impact your current coverage. Carriers are assessing the changes brought on by COVID-19 and what additional exposures, if any, there might be.
We have put together some information on how your professional liability insurance policy may be affected by the current pandemic.
Are There Policy Exclusions For COVID-19?
Most admitted professional liability policies have standard and similar exclusions. Typically, these exclusions speak to professional services by your Law Firm which would not be covered in the event of a claim. Additionally, most carriers have special endorsements they might include to exclude higher exposure risks.
What we stress is to stay in contact with your carrier regarding any potential COVID-19 exclusion that could apply to your policy. If an exclusion is a possibility, understanding what specific language will be used and what would actually be excluded is important.
Are There Policy Extensions For COVID-19?
Your policy includes extensions of coverage that offer various coverages for matters other than a claim against your firm. One of the extensions that could apply is called a Crisis Event.
Should an event occur that could have an adverse effect on your firm, the policy could respond via the Crisis Event Extension. Therefore, if COVID-19 negatively impacts your firm, you may have coverage.
It’s vital to read your policies definition of a Crisis Event to understand how COVID-19 could trigger this extension. If COVID-19 caused an illness or death of an Insured or, the Named Insured was forced to dissolve, your Crisis Event Extension could be triggered.
During this time carriers may add endorsements to their policy to account for some of the changes and challenges we are all facing during this time. For example, Protexure has included an endorsement to our policy to account for the changes in procedural law allowing remote notarization within certain jurisdictions
This is another situation where we recommend contacting your carrier to examine the specifics of your policy. You’ll want to understand what that coverage is and how to report it.
Will Changes to my Firm During COVID-19 Affect My Coverage?
You’ve probably made, or are still making, changes in how you conduct business in response to COVID-19. It’s important to realize although these changes are necessary, your insurance carry may feel your current policy is now inadequate.
If you’ve implemented working from home, cut staff, made changes to management protocols, volume and or nature of case intake or any other material change on day to day operations, your carrier may decide there is an increased exposure from when your firm was last underwritten.
For example, during this pandemic, your business might see a decrease in client intake. In order to maintain financial stability, some attorneys may choose to engage in cases outside their expertise. Even if the cases are considered low risk, the carrier may view these changes as a risk to the firm because they are operating outside of their declared areas of practice.
Additionally, under the same circumstances, if the firm takes on a high risk case(s) they could see an increase in renewal premium or the carrier may look to non-renew the firm as then potentially no longer fits within the carriers underwriting guidelines.
To respond to the upcoming changes in law firm profiles, carriers may take some precautions including: lowering limits, increasing deductible, requiring an exclusion endorsement, premium increase or a non-renewal.
More than likely, none of these precautions will or can be taken during the policy period. If your carrier sees fit to make changes to your coverage, they typically need to do so within a certain time frame of your renewal date. Each state has different requirements on what insurance carriers can and cannot do. Your State Bar Association can help you become better informed on what your carrier can and cannot do to impact your coverage.
A change in limit and or deductible is possible but what’s more likely is the carrier to offer your current coverage at a higher premium.This of course is assuming your practice has gone through a material change or changes and the Underwriter has deemed it necessary to account for the increased risk.
Furthermore, if your carrier offers a help hotline, we suggest calling and learning how any material changes in operations could affect your policy.
Staying in Touch During Turbulent Times
We’ve all made changes to how we operate our business and frankly, our lives because of COVID-19.
Although we know how COVID-19 has affected us thus far, we aren’t quite sure how it will affect us down the road.
It’s important to stay in contact with your carrier to make sure you have the coverage you need and how the changes you’ve made to your business could negatively impact your policy.