Insurance Glossary

When purchasing insurance, it is important for clients to know the various options available and understand the definitions of each. Brokers are an invaluable resource in helping select the best possible coverage yet are often providing policies for any number of industries and all areas of business coverage. To help, ProLawyer Insurance has outline several frequently asked questions and glossary of terms specific to Lawyers Professional Liability.

For New Jersey law firms, what does 50% offset mean?

Defense costs equal to 50% of the Per Claim Liability Limit are provided in addition to the policy limit. If defense costs exceed 50%, the Per Claim Liability Limit may be reduced by up to 50%. Any defense costs incurred beyond the second 50% are then paid in addition to the liability limits.

What is the difference between Defense Inside (CEIL) and Defense Outside (CEOL) the limit of liability?

Defense Costs Inside the Limits of Liability (CEIL) means that both the loss amount and claim expenses are deducted from the available limit of liability. This reduces the amount of a client's available limits to pay the actual claim. Defense Costs Outside the Limits of Liability (CEOL) refers to cases when only the damages or settlement amount is deducted from the available limit of liability subject to any policy limitations. Defense costs are in addition to (or outside) the limits of liability.

What is a prior acts date?

The prior acts date, also referred to as the retroactive date, represents the date after which services provided covered by the client’s lawyer professional liability insurance policy. The prior acts date typically is the effective date of the first claims made policy purchased and will be shown on continuously renewed policies.

What is the renewal process?

For Producers: The renewal solicitation will be emailed approximately 120 days prior to the expiration date of client's policy.

For Insureds: A renewal application is required each year. Agents will send clients both the application and supplements for completion. A renewal quote is released approximately 30 days prior to expiration.

Why do some firms need to be written surplus lines of Lawyers Professional Liability coverage?

In certain instances, law firms may not qualify for an admitted market policy for various reasons. Most commonly, this is due to prior claims experience or a high-risk area of practice, such as SEC matters, class action suits, environmental cases, entertainment law and disciplinary actions.

What are the most common deductible options and how are they different?

Within the realm of Lawyer Professional Liability insurance there are four (4) main deductible options.

Loss and Defense Per Claim Deductible: The deductible applies to losses and/or expenses incurred and each claim made and reported during the policy period or any extended reporting period.

Loss and Defense Annual Aggregate Deductible: The deductible applies to losses and/or expenses incurred and each claim made and reported during the policy period or any extended reporting period, with a maximum deductible amount per policy period.

Loss Only Per Claim Deductible: The deductible applies only to losses/damages for each claim made and reported during the policy period or any extended reporting period. The deductible does not apply to claim expenses.

Loss Only Annual Aggregate Deductible: The deductible applies only to losses/damages for each claim made and reported during the policy period or any extended reporting period, with a maximum deductible amount per policy period. The deductible does not apply to claim expenses.