Malpractice Terms

Claims-Made Policy

A policy providing liability coverage only if a written claim is made during the policy period or any applicable extended reporting period. For example, a claim made in the current year could be charged against the current policy even if the loss occurred many years in the past.

Claim

A claim is the notification of an incident made to the insurance company and a demand for benefits as provided by the policy. With a claims-made policy, a claim must be reported to the carrier as soon as you know of the claim and during the time your policy is in effect. Unless this is done, the claim may not be covered.

Claim / Incident Notification

Notification is the opportunity for an insured to report any potential claims or incidents which may result in a claim during the policy period. Reporting of all potential claims is crucial to the claims-made policy and all insureds are asked to disclose incidents as soon as they are aware of them.

Deductible

A provision or clause in your insurance policy that the first given number of dollars or percentage of expense will not be reimbursed, but paid by the policy-holder.

Endorsement

A form attached to the policy using the language necessary to change the terms of the policy to address specific circumstances. For example, adding or deleting attorneys.

Extended Reporting Endorsement

An endorsement allowing for making claims after the expiration of a "claims-made" liability policy, also known as "tail" coverage.

Prior Acts Coverage

The prior acts is a date used to extend retroactive coverage for errors and omissions occurring prior to the effective date of the current policy. This date is set forth in your policy and may change if a gap in your coverage occurs.

Step Rating

Premiums for a claims-made policy are commonly set by what is called "step-rating". This procedure attempts to quantify the degree of exposure presented by a particular insured. The number of continuous years an attorney is insured by Lawyers Mutual determines the step rate. The step rate will increase each year for six years, until it reaches the "mature" rate.

Tail Coverage

This term has been used to describe both the exposure that exists after the expiration of a policy and the coverage that may be purchased to cover that exposure. On a "claims-made" policy, tail coverage may be purchased to extend the period for reporting covered claims beyond the policy period.