Lawyers Insurance Archives - Page 4 of 11 - Lawyers Insurance Alliance

Flood Insurance Versus Water Damage

Is it covered by flood insurance or is it water damage covered by property insurance? Over the past year, we saw how many storms devastated many parts of the country, flooding homes and businesses, destroying roads, and ruining many lives.

From those storms, we received many calls about how insurance will respond to help law firms recover from the tragedies. So with that in mind, we want to share some insight into how a property insurance policy responds to a water damage claim and where flood coverage comes into play.

How your firm’s insurance policy will respond to these claims depends on how the water entered your office. And while every law firm’s property insurance policy differs, there are basic features common to all property policies.

WATER DAMAGE

A firm’s property policy doesn’t provide coverage for flood damage, but it does cover many types of water damage to your office.

For insurance purposes, the damage is considered to occur when water damages your office before the water comes in contact with the ground.

Your property policy would cover the following scenarios as they would be considered water damage:

A hailstorm smashes your window, permitting hail and rain access into your firm.
Heavy rain soaks through the roof, allowing water to drip through your ceiling.
A broken water pipe spews water into your firm.

FLOOD INSURANCE

As the name implies, a standard flood insurance policy, which the National Flood Insurance Program writes, provides coverage up to the policy limit for damage caused by a flood. The dictionary defines “flood” as the rising and overflowing of a body of water onto normally dry land.

For insurance purposes, the word “rising” in this definition is the key to distinguishing flood damage from water damage. Generally, damage caused by water on the ground at some point before damaging your firm is considered flood damage. A handful of examples of flood damage include:

A nearby river overflows its banks and washes into your office.
A heavy rain seeps into your office because the soil can’t absorb the water quickly enough.
A heavy rain or flash flood causes the hill behind your office to collapse into a mud slide that oozes into your building.

Flood damage to your home can be insured only with a flood insurance policy — no other insurance will cover flood damage.

FINAL NOTE

If, for some reason, a water-related claim is not covered by a flood or property insurance policy, losses from theft, fire, or explosion resulting from water are covered.

For example, if a nearby creek overflows and floods your office, and looters steal some of your furnishings after you evacuate, your property policy would cover the theft because it directly results from the water damage. H wever, the flood damage would be covered only if you have flood insurance.

We hope this provides you with insight into how both flood and property insurance will respond to water damage claims.
If you have any questions or would like to submit a claim, please feel free to give our office a call.

General Liability Basics

Law firms are growing at a tremendous rate, and we have been able to work with many of them in implementing their first insurance policy. In setting up a firm’s first insurance program, general liability insurance is the most basic and primary coverage. Just because it’s the essential coverage doesn’t mean it is understood by many outside the insurance industry. We wanted to create a blog post outlining the basics of a general liability insurance policy and why it’s so essential for a law firm to carry one.

What does general liability insurance cover?

Under a liability insurance policy, your insurance company will be any legal claims and defense costs for covered claims and lawsuits. Covered liability claims include bodily injury, property damage, personal injury, and advertising injury.

The amount of coverage a firm should purchase depends upon various factors. Most states require minimum liability limits of $1 million per occurrence and $2 million aggregate limits. Depending upon the size of your firm and other risk factors, it may be necessary to purchase additional limits.

General liability insurance is essential for law firms because even minor incidents can quickly turn into lawsuits in today’s litigious society. This is why insurance companies require firms to report any accident that could potentially result in a claim as soon as possible. This includes documenting the situation, forwarding any summons and legal notices, and cooperating fully in any investigations.

If you have any additional questions about how a general liability insurance policy can help your firm, please don’t hesitate to give our office a call at (702) 507-6999.

Preventing Crime

Preventing crime does not need to take up a lot of your time, nor should it cost money. You must take the time to proactively institute sound policies with your employees and some protective measures throughout your law firm.

Crime is a serious threat to any business, and law firms have not been immune. Poor procedures, inexperienced employees, and lack of control increase the likelihood of your firm experiencing some claims.

Here are some tips to help get you started:

Burglary

Reinforce any side and rear doors with cross-bars.
Secure all entrances with double cylinder, long-throw, deadbolt locks.
Protect windows and skylights with burglar screens, bars, or thick, unbreakable Plexiglass.
Affix a cash safe (if you have one) to the floor with surveillance cameras and sensor lights.

Employee Theft

Require two signatures on checks above specific amounts like $500 or $1,000.
Reconcile bank accounts and credit card statements weekly.
Limit access to safe, cash, and checks.
Change the safe combination immediately after any employee knows it is terminated.
- Control access to keys and, if possible, use a fingerprint scanner to access the building.

If you have any additional questions or want to find out how crime insurance can help protect your law firm, please don’t hesitate to call our office.

Boiler and Machinery Insurance

Boiler and Machinery Insurance is an often overlooked insurance that can help protect your law firm from potential insurance claims.

To help provide some insight into what Boiler and Machinery Insurance are, we have compiled a list of the most common questions associated with the coverage.

What is Boiler and Machinery (Equipment Breakdown) Insurance?

Equipment breakdown insurance for the financial losses incurred when equipment breaks down suddenly and accidentally. Causes of loss can include power surges, short circuits, motor burnout, and mechanical breakdown.

Why Do I Need this Coverage?

The costs associated with your equipment breaking down can be significant enough to affect the normal operations of your law firm.

Who Needs It?

Suppose your law firm has or owns any type of large equipment like heating and air conditioning equipment, communication networks, or any other large pieces of equipment. In that case, you should consider this coverage.

What Does this Coverage Pay For?

Equipment Breakdown coverage pays for the cost of repairing or replacing damaged equipment. It can also provide coverage for any income or extra expenses you incur to get your firm back up.

Our Law Firm Just Rents Our Building. Do I Still Need Boiler and Machinery Insurance?

Even if you don’t own your building, you still face potential losses associated with equipment within your building that could break down. For example, damage to your phone systems, fax machines, computers, and air conditioning units can cause significant financial damage.

If your firm has any additional questions on how this insurance can help, please give our office a call.

Blanket Insurance

One of the recommendations we usually make to law firms with more than one location is for them to add blanket coverage to their property insurance. As many law firms don’t have this coverage or know what it is, we thought we would provide some insight on how this coverage can help your firm.

This coverage allows you to use one limit of insurance across multiple locations. There are two situations where this usually applies to law firms:

If your law firm has multiple offices with many buildings, this insurance will make covering all of the buildings much more accessible.
Suppose your law firm has property that you move between offices frequently. In that case, it is much easier to have a blanket limit of insurance rather than adjusting your limits of insurance to account for the fluctuations in the property.

Who Needs Blanket Insurance?

If your firm has multiple locations or buildings that need to be insured, a blanket property insurance policy may be ideal.

However, any policy needs to be evaluated on a case-by-case basis. So it is essential to work with a knowledgeable agent who can customize coverage to your needs.

How Much Does It Cost?

One of the most significant benefits of this coverage is that it can usually be added to your policy for no additional premium.

If you would like to find out more about this insurance and whether your law firm needs the coverage or not, please feel free to contact our office.

Litigation-related Claims

Litigation errors breed the largest number of malpractice claims reported each year. In recent years, errors arising out of litigation accounted for nearly 36% of all reported claims. In the vast majority of cases, the statute of limitation on the client’s case expired and there was nothing left to do but assess the damages.

Below are the top three errors that lead to malpractice claims for attorneys.

FAILING TO MAINTAIN A COMPREHENSIVE CALENDARING/DOCKET CONTROL SYSTEM

Lawyers miss deadlines for a variety of reasons, but the most common is the lack of a good calendaring and docket control system. It does not matter whether you use a computerized case management and calendaring system or an old-fashioned tickler box. The most important aspects of a good docket control system are that (a) all relevant dates, whether they be statutes of limitation, appointments, or discovery deadlines be entered into the system and (b) several advance warnings of each deadline be given to the attorney and support persons involved.

WAITING UNTIL THE LAST MINUTE TO FILE THE COMPLAINT

One of the biggest mistakes that leads to malpractice suits is the tendency for the plaintiff’s lawyer to file a complaint at the eleventh hour – on the eve of the statute of limitation deadline. Although the lawyer believes he is within the “safety zone” because the limitation period has not yet expired, filing at the last minute is often a risky practice. In many cases, the plaintiff’s lawyer may be unable to perfect service of the summons and must file an alias and pluries summons to keep the action alive.

Sometimes the lawyer and/or his support staff forget to calendar the date the original summons expires. As a result, the action is barred because the statute of limitation expires before the summons is renewed. Other times, the lawyer inadvertently names the wrong defendant, and the opposing party files a motion to dismiss on that basis. If the complaint is filed at the last minute, the lawyer has little or no time left to investigate and determine the name of the proper party before the deadline passes.

For these reasons, we strongly encourage plaintiffs’ attorneys to file the complaint well in advance of the statute of limitation deadline. Filing early will give you more time to fix mistakes such as improper service or naming the wrong party. Hopefully, this extra time will give you an opportunity to correct mistakes before a malpractice claim develops.

FAILING TO KNOW THE CORRECT STATUTE OF LIMITATION

Sometimes, even with proper docket control systems, the lawyer fails to determine the correct statute of limitation applicable to the case. As different jurisdictions and types of cases all have different time frames, it’s important to verify the applicable statute of limitation.

Occurrence vs. Claims-made Form

Most insurance policies for law firms consist of two coverage forms that determine how the policy will respond to a claim: occurrence form and claims-made form. We want to spend the next two posts explaining these two forms and how they can affect your law firm in the event of a claim.

Occurrence Form

Occurrence form is the most common type of coverage form for commercial insurance. Aside from professional and executive liability policies, occurrence is the prevailing coverage on almost every policy.

The term “occurrence” relates to the moment the claim/injury happens. Then, once the date of “occurrence” is established, the policyholder knows which policy (or policies) will respond to the incident. The policy in force at the time of the incident will be the one to defend the policyholder and possibly pay the damages resulting from the claim.

Unfortunately, as simple as the concept sounds, several different legal theories are used to identify when the claim occurs. Every state is different, and any one of the following precedents could be used to determine the occurrence date:

1. Injury-in-Fact: Some states consider that the date of ANY actual bodily injury or property damage is the date of occurrence regardless of the date of manifestation. (For example, the day the nail was driven into the electrical wire.)

2. Manifestation Theory: Most states consider the date the injury manifests itself or becomes evident as the occurrence. (i.e., the day the fire starts because of the nail driven into it. )

3. Exposure or Continuous Trigger Theory: Known by two different names, this is when the courts consider dates of exposure as the dates of occurrence. This usually means there will be multiple occurrence dates and multiple policies involved in the litigation and settlement of the claim. These types of claims rarely, if ever, affect law firms, and this primarily applies to claims for pollution or other incidents with a potential for a long exposure period.

For law firms, any one of the triggers could above apply depending upon your policy and the type of claim. However, as most law firms’ claims fall under general liability and business auto policies, it’s easy to determine which policy will respond.

Claims-made Form Differences

Unlike an occurrence-based policy, where only the date of occurrence must be determined (or occurrences – based on the legal theory applied), three dates must be known and decided to trigger coverage in a “claims-made” form. These important dates are:

1. The Date of Occurrence;
2. The Retroactive Date (found inside the policy); and
3. The Date the “Claim” is Made.

The date of occurrence was discussed in our last post, and the date the claim is made might be considered self-evident. However, the term “retroactive date” necessitates further explanation.

A retroactive date is a limiting provision in the “claims made” policy. If an injury or damage occurs BEFORE this date – the policy will not respond to the loss. If covered injury or damage occurs AFTER the retroactive date, the policy in effect when the claim is made will respond to defend and pay the claim.

For example, your employment practices liability policy has January 1, 2004, retroactive date, and the injury is determined to have occurred on November 1, 2003. The claim was then reported on February 1, 2004. In this example, the policy in effect on February 1, 2004, will NOT pay for or defend the injury because the occurrence/injury took place before the retroactive date. Even worse, the prior claims-made policy will probably not pay the loss because the claim was not made during the policy period.

Continuing the above-simplified example, if the retroactive date were January 1, 2003, the policy on February 1, 2004 (when the claim is made) would respond in defense or payment of the injury.

These examples highlight the importance of working with an insurance agency that understands claims-made policies and how they can affect you and your law firm.

If you have any additional questions, please don’t hesitate to contact us.

What is coinsurance?

A common but seldom understood provision in a property insurance policy is coinsurance. We have found that many law firms don’t know what coinsurance is and how it affects their insurance policy.

Coinsurance is a “penalty” from insurance companies for underinsuring property. Only 2% of property losses are total losses, while 86% of property losses are less than 20% of the property’s value. So to make sure that clients don’t provide limits of insurance that are less than the values of the property, the insurance company has a coinsurance penalty.

Insurance companies will require clients to insure their property up to a specified percentage of the property’s value (usually 80%, 90%, 0r 100%). If the insured amount is less than the appropriate percentages, the insurance company will invoke the coinsurance penalty in the event of a claim.

Example:

The best way to explain coinsurance is with an example of how it works. Let’s say that a law firm has a building that is worth $1,000,000. However, to save money on their premiums, the firm decides to insure the building for only $500,000, knowing that its chances of a total loss are minimal.

Now let’s say the law firm experiences a fire that will cost $150,000 to repair. When the adjuster arrives to assess the damage, he realizes the building’s value is $1,000,000 instead of the $500,000 provided by the firm. Since the firm only purchased limits equal to 50% of the building’s value, the insurance company will invoke a coinsurance penalty and pay for only 50% of the claim.

It becomes readily apparent with the example that it simply is not worth it to try and insure the property for amounts less than their actual value. Doing so will not save you much on your insurance premiums while causing you significant headaches in the long run.

Storage Unit Insurance

One of the questions we receive from a number of the law firm we work with is about properly insuring items inside a storage unit. Many firms will have excess property they don’t want to keep on campus, so they will typically keep it in a storage unit for a temporary or even permanent basis.

If the property in the storage unit is stolen or destroyed, how your insurance company will respond is really dependent on how your property insurance policy was written. Handling the claim could (and should) be as simple as the property adjuster confirming the claim is covered, determining the amount of coverage, and cutting your law firm a check.

Unfortunately, there are situations where the claim isn’t covered, or the coverage is at a highly reduced amount from the actual value of the property located within the unit.

Insuring a Storage Unit Properly

When we see problems arise with property claims stemming from a storage unit, it is usually because the insurance agent was unaware the storage unit existed. The law firm didn’t know it needed to notify its agent of the location. So the best way to ensure you have coverage for the items located within your firm’s storage unit is to have your insurance agent add the storage unit as if it were another location for the law firm.

With a location address and limit listed on the policy, you can eliminate any claims-related headaches associated with the unit. (Make sure you talk with your agent about the type of property stored in the unit. Old tables, desks, and chairs are insured very differently from old firm files and records.)

Is There Coverage If I Forgot To Include The Location On My Policy?

If you forget to include your storage unit located on the policy and your storage unit is vandalized or destroyed, you may still have coverage on your policy. Many property policies will include a coverage called “Off-Premises Property” that will provide your law firm with some protection in the event of a claim. This limit is usually capped at $5,000 or $10,000, so you shouldn’t use this coverage as a safety net.

Employee-owned Auto Coverage

Why do I need auto coverage if my law firm doesn’t own any vehicles? We get asked this question frequently, so I want to clarify some confusion surrounding this coverage.

There are scenarios where a law firm must have auto coverage to properly cover a claim even if they don’t own any autos. For example, if you send an employee on an errand in their own vehicle and the employee is involved in an accident where they are at fault, your firm can be named in the lawsuit because it was a company-related errand or she was sent on.

How do you protect yourself in this type of scenario? Hired and non-owned auto coverage is specifically designed to protect you and your company from situations like the one mentioned above. This coverage protects you from bodily injury and property damage arising from using a vehicle that is owned by an individual other than the firm but is used on the firm’s behalf.

For law firms, this coverage can actually be added to your general liability policy for little or no additional cost, even when selecting limits as high as $1,000,000.

Coverage Tips:

This coverage is supplemental coverage meaning your employee’s insurance policy will pay first; if your employee’s limits are exhausted from a claim or you do not have insurance, the non-owned and hired auto coverage will pay. Tip: Verify all employees carry insurance on their vehicles with minimum limits of $100,000 per occurrence.
Coverage for “hired” vehicles will provide liability coverage for rental vehicles you may use for company business. Be aware that it will only replace the liability portion, not the physical damage coverage. Therefore, it is still important to purchase the rental agency’s physical damage coverage, or you can actually purchase the coverage through your current insurance company.
Check MVRs (Motor Vehicle Records) for all employees. By verifying the driving records of all of your employees will help protect you from potential claims. You will know which drivers to avoid sending on company-related errands because of the potential risk they pose.