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Most of our insured know how a claims made and reported policy works. Please consider this a brief reminder.  If you are not a Mitchell and Mitchell insured, perhaps you will learn new information on a confusing aspect of an insurance policy type. 

The two forms of insurance policies are occurrence and claims made. With an occurrence policy (think auto, homeowners) whichever company that is insuring you when the accident occurs would be taking care of the claim. With a claims made policy, it is the carrier that is currently insuring you that will take care of the claim provided you had insurance when the alleged mistake occurred (prior acts coverage) and there has been no gap in coverage between then and now. No one wants to pay for professional  liability insurance after they retire so it is very important, especially for a sole practitioner, to buy your malpractice insurance from a carrier that provides a free tail (or ERP) endorsement at retirement. It is as important to buy coverage from a carrier likely to still be writing this type of insurance years down the road in case you get hit with a claim then. 

New insured should be aware that claims made and reported policies are subject to a  step rating process wherein the premium increases the first several years of your insurance history. This is simply because the exposure period increases. For instance, the first year a lawyer has insurance, he is only covered for legal services performed that year and if a claim is reported that first year. The second year, the carrier is covering the legal services done the first year and the second year and so on until after about five renewals when the premium rate matures. With the CNA lawyers professional liability program, the mature rate is approximately twice the first year rate. 

Finally, with claims made and reported policies, an insured is under an obligation to report a claim as soon as reasonably possible upon becoming aware of a claim or potential claim. Even if you are simply renewing coverage with your existing carrier, it is imperative you report a claim during the policy period if you become aware of a claim or incident. Otherwise, a carrier would deny the claim. I have never seen CNA do so but I have heard horror  stories of this happening with other carriers. 

If you have any questions regarding a claims made policy or would like a quote for malpractice insurance, please contact our office at 888-512-8878.

By Dan McKenna, JD, RPLU
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